Pango in advanced negotiations to acquire Gett at $250 million valuation
Pango in advanced negotiations to acquire Gett at $250 million valuation
Swedish fund VNV Global currently controls Gett, which has raised $900 million to date
After the negotiations with Fortissimo Capital fell through, Gett's shareholders are continuing their efforts to find a buyer for the company. Calcalist has learned that Gett is in advanced negotiations for a sale with another party, surprisingly, the Israeli company Pango.
The negotiations are conducted around a value of NIS 800-900 million for Gett (about $220-250 million), a value that Fortissimo, managed by Yuval Cohen, was not willing to pay. For Pango, this represents a synergistic opportunity, as it aims to combine parking and travel services.
This deal marks a significant move for Pango, as it is aiming to acquire a company larger than itself. Pango is owned by the Weil family (56%), which also controls the Minrav infrastructure company, a wet cement company, and the Terem clinic chain. Pango is held by the family through the Milgam management company.
Gett, founded in 2010, has experienced various ups and downs. The company has raised $900 million since its inception, with the main shareholder currently being Swedish fund VNV Global, which owns a 43% stake. The Swedish fund initially invested a relatively small sum of $40 million in the purchase of a debt of $140 million from Russian Sberbank, and in total, has invested $107 million in Gett so far.
VNV is likely to recoup much of its investment should a deal go ahead, but other investors, such as the Baring Vostok fund and Len Blavatnik, who was one of the first investors in the company, are likely to experience losses. In 2016, Gett raised $300 million from the car manufacturer Volkswagen, but in 2018, it was reported in the German press that the company had already written off the investment.
The value of Gett has fluctuated in recent reports, with estimates as low as $222 million in VNV's recent annual report, which is the value around which negotiations are being held.
In the fund's annual reports, it states that the company presented a strong fourth quarter, with a rapid recovery that brought it back to the level of 80% of the revenues it reached prior to the war. The revenues at the end of the year were above forecasts, while Gett’s performance in the UK remained strong. According to VNV, Gett has registered a positive EBITDA continuously starting from the third quarter of 2022.
Pango, known for its digital parking services app, offers a range of services to its users, including express parking, car washing, parking space location, refueling services, and collaboration with the Shagrir company for rescue services.
The Weil family is one of the richest families in Israel but maintains a relatively low profile. It previously sold its shares in Osem to Nestlé in 1997 and in the past also controlled energy company Enlight alongside Shaul Elovitch.
The Weil family held 100% of Pango until 2020 when it sold a 44% stake at a company value of NIS 550 million.
Pango may divest Gett's UK operations post-acquisition, while the profitable Israeli operations could be developed further with the infusion of capital. Gett’s activity in Israel is profitable and boasts an EBITDA of NIS 40-50 million. For the purpose of the deal, the activity in Israel may be separated into a subsidiary, and the capital influx will enable Gett to expand into additional territories.
Gett was founded 14 years ago by Dave Waiser and Roi More, who have not been actively involved in the company for years. Gett announced Waiser's departure in May 2022. Max Krasnykh and Matteo de Renzi, who were previously COO and Managing Director of GTM and UK, respectively, replaced Waiser as co-CEOs.
The company initially operated in the U.S., Russia, the UK, and Israel, but over the years, it withdrew from Russia and the U.S. In 2019, Gett pursued an IPO on Nasdaq at a valuation of $1.1 billion through a merger with a SPAC named Rosecliff Acquisition Corp I. The potential IPO caused discontent among employees who were disappointed by the low valuation compared to the options they held.
In 2020, the company announced a round of funding totaling $100 million at a valuation of $1.5 billion and postponed the IPO. The merger with the SPAC was expected to inject $250 million into the company.
In April 2022, the IPO was canceled, and simultaneously, Gett announced its exit from operations in Russia, which, along with Great Britain and Israel, had been one of its three main markets since exiting the U.S. in 2018. The exit from Russia was due to the sanctions imposed by the U.S. on Russia following the war with Ukraine and fierce competition with Yandex.
A month after the IPO cancellation, Waiser announced his departure from the company.
In a recent report to investors, VNV stated that Gett would focus in the coming period on product improvement, solutions for business travelers, and new business opportunities.
The exit from Russia has improved Gett's financial situation, reducing cash burn significantly and transitioning to a new operating model. Instead of offering taxi transportation services, Gett now defines itself as a corporate software company for organizations (B2B). It operates a cloud-based software platform that enables the booking of trips by taxis, limousines, and private cars. This service is offered to organizations worldwide, establishing active partnerships with over 2,000 organizations.
Gett said in response: "Since becoming one of the few profitable companies in the world in its sector, Gett has attracted considerable interest from financial entities and strategic partners in Israel and globally. The company cannot comment on talks it is holding with business entities."
