from the May 2013 issue

Competitor bids to buy Spuntech

Sources revealed" that NR Spuntech Industries (TASE: SPNTC), which makes non-woven fabrics, mainly for the wet wipes industry, has received a takeover bid from one of its competitors. So far this year, Spuntech's share price has shot up by 50%, giving it a market cap of NIS 363 million.

The main shareholders in Spuntech are Nissan Industries (68%), controlled by Yehezkel Nissan, Judith Recanati's Gandir Investments (14%), and Psagot (7%). Spuntech was founded in 1996. It manufactures non-woven fabrics with a technique known as hydro entanglement, which uses high-pressure jets of water to knot fibers together. Since 2002, the company has been managed by Gideon Krasny.

Spuntech is an exports-oriented company, with 90% of its production going to the US and Europe. Its largest factory is in North Carolina, and it has three factories in Israel. From 2008 to the third quarter of 2012, the company paid dividends totaling NIS 150 million.

In the first nine months of 2012, Spuntech benefited from the strength of the US dollar against the shekel, and from expansion of its activity, so that its revenue for this period rose 10% to NIS 355 million.

The improvement in sales helped the company to boost its gross profit, and, together with lower finance costs, this led to a 27% rise in its net profit to NIS 27 million.

The company's shareholders equity is NIS 121 million, and it has current liabilities of NIS 152 million, mostly to the banks, and long-term liabilities of NIS 109 million.

Israel is a world power in non-woven fabric. Shalag Industries (TASE:SALG) and Albaad Massuot Yitzhak Ltd. (TASE: ALBA) have market caps similar to that of Spuntech, and post similar profits. Avgol Nonwoven Industries Ltd. (TASE:AVGL), the largest company in the industry, makes an annual profit of over NIS 100 million, and has a market cap of NIS 1.1 billion.

Reprinted from the Israel High-Tech & Investment Report May 2013

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