February 24, 2014

Will One of the WorldÕs Largest Kosher Companies be Owned by the Chinese Government

TEL AVIV — Turn to any talk show these days in Israel and you are likely to hear a rather loud debate over a prospective sale of Tnuva, Israel’s biggest food company, to Bright Food, owned by the Chinese government. With its exclusive kosher line, the Chinese would presumably own the largest kosher company in the world. Bright Food is in talks to buy all of the Tnuva shares controlled by Apax, a British private equity fund, in a deal that values the company at $2.5 billion. Tnuva’s farmers are up in arms as are those that cannot fathom an Israeli company being owned by the last Communist superpower. Bright Food, which is controlled by the Chinese government had turnover of $7 billion in 2011. It is China’s second-largest food company and has four publicly traded subsidiaries, including Food & Bright Dairy.

The sale of control of Tnuva to Bright Food would yield Apax a $1.2 billion profit on its investment in Tnuva. Apax and Mivtach Shamir bought control of the company in 2008 at a company value of $989 million. Apart from selling the stake now at a $2.5 billion valuation, Tnuva has over the years distributed dividends totaling $650 million. One caller wondered if Israeli food companies were conducting a fire sale. He mentioned companies like Osem being partially owned by Nestle and Strauss by PepsiCo.