Intel project shake-up slashes Pach Taas’s valuation in $44M sale
Rimon acquires 50% stake in Pach Taas after Intel contract revision impacts deal terms.
Almost a year after the memorandum of understanding was first signed between the parties, the sale of Pach Taas is underway. At the end of the week, the listed infrastructure group Rimon signed a deal in which it will purchase 50% of the shares of the industrial company Pach Taas from Aharon Shapira for NIS 80 million ($22.1 million), reflecting a total company valuation of NIS 160 million ($44.2 million). This is approximately 20% lower than the NIS 200 million ($55.2 million) valuation initially outlined in the memorandum of understanding signed in April 2024 and first revealed by Calcalist. The valuation dropped due to dividends withdrawn from the company and, primarily, the cancellation of part of a large project Pach Taas was supposed to execute for Intel.
The deal also includes Pach Taas's real estate, which was not initially part of the memorandum of understanding. Last year’s outline allowed Rimon the option to add Pach Taas’s real estate to the deal for an undisclosed amount. However, the current deal does not include the land on which the plant is built, which belongs to a sister company and is estimated to be worth NIS 100 million ($27.6 million).
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Rimon Group CEO Yossi Elmalem (right) and Pach Taas' Aharon Shapira.
(Photo: David Moskovitz)
In the first stage, Rimon, which is controlled by the Granot group, Israel's largest regional agricultural organization (44.4%), will pay NIS 64 million ($17.7 million). An additional NIS 16 million ($4.4 million) will be deposited with a trustee, with NIS 3 million ($828,000) of that amount to be paid to Shapira after one year. If Shapira, who is selling the shares through a private company, fails to meet the obligations set forth in the agreement, Rimon will be able to deduct up to NIS 13 million ($3.6 million) from the total consideration.
Additionally, according to the memorandum of intent reported to the stock exchange on Sunday, Shapira will be entitled to withdraw up to NIS 20 million ($5.5 million) from Pach Taas's treasury, contingent on the company's EBITDA performance from 2025 to 2027. This clause was not included in the April 2024 memorandum and likely contributed to the deal’s lower valuation.
Pach Taas manufactures air treatment and ventilation systems for industrial clients, including factories, server farms, power plants, and desalination plants. The company is managed by Avi Cohen, who will retain his 50% ownership stake and continue to lead the business. Cohen inherited his shares from his father, Marcel Cohen, who co-founded the company in the 1970s alongside Shapira after the two left Ashkelon Plywood, a wood industry company.
As part of the agreements between Rimon and Cohen, Rimon will have veto power over the dismissal of the CEO, appointment of a new CEO, approval of the company's annual budget, and any dividend distribution exceeding the company's set policy.
According to data provided by Rimon, Pach Taas ended 2023 with revenues of NIS 308.8 million ($85.3 million), a gross profit of NIS 93.4 million ($25.8 million), an operating profit of NIS 61.4 million ($17 million), and a net profit of NIS 58.3 million ($16.1 million). The company did not disclose comparative figures for 2024. If its results remain consistent, the deal is being made at a profit multiple of 2.7—considered relatively low for an industrial company.
Intel contract changes impact Pach Taas valuation
The project that Pach Taas was supposed to carry out for Intel, whose partial cancellation reduced the deal’s valuation, is linked to the expansion of Intel’s Kiryat Gat chip factory. In 2022, Intel reportedly ordered ventilation ducts for the new plant from Pach Taas in a deal worth between NIS 300 million and NIS 400 million ($82.9 million–$110.5 million), approximately equal to Pach Taas’s annual revenue. Intel also ordered 16 custom-made units at a cost of NIS 170 million ($47 million).
Rimon did not disclose details regarding the specific portion of the Intel project that was canceled but stated, "Most of the company’s revenues today come from a major customer (Intel—though not explicitly named in the report), whose future level of activity with Pach Taas is unknown to the company." However, Rimon also noted that "the viability of the investment in Pach Taas is not dependent on its continued business with this customer."
For Rimon, which is managed by Yossi Elmalem and traded on the Tel Aviv Stock Exchange at a valuation of NIS 1.5 billion ($414 million), the acquisition represents an expansion into a complementary product segment. The company specializes in solutions and projects related to water, energy, and agriculture, and the addition of industrial ventilation solutions strengthens its offering for large-scale customers.
According to Rimon’s report, "The company intends to expand Pach Taas’s business into new markets and diversify its customer base."
