Meshulam Riklis bid for Burger King Israel believed highest

Riklis is apparently bidding $6.5-7.5 million. The court disqualified the bid by McDonald’s Israel and Burger Ranch.

Industry sources believe that contrary to expectations, Meshulam Riklis made the highest bid for the assets of Burger King Israel franchise holder Rikamor, which is under a stay of proceedings. Riklis owns Rikamor. The pricing for the chain will take place on Thursday in the office of Burger King Israel trustee Adv. Doron Tischmann.

Riklis’s bid is believed to be $6.5-7.5 million for Rikamor’s assets, probably part in cash and part in bank financing. The Orgad family and a McDonald’s Israel-Burger Ranch partnership, which submitted a joint bid, are also expected to take part in the pricing.

Riklis’s bid amounts to an attempt to repurchase the Burger King Israel franchise at a price lower than it true value. After the sale of its assets, Rikamor will remain a skeleton with losses and debts, and will almost certainly be liquidated and sold, mostly for tax purposes.

Judges are inclined to suspect such bids by the previous controlling shareholders, but Judge Varda Alshech may have no alternative to accepting Riklis’s bid. She already announced at the beginning of June that there was little likelihood she would accept the bid by McDonald’s Israel and Burger Ranch. She wrote, “While I’m not making a definite commitment on the matter, it seems clear to me that this bid, which was made by the business competitors of Burger King, is questionable.

”In all probability, the acquisition of the chain by these bidders is for the purpose of closing it down, thereby eliminating a competitor in the fast food market of those who made this bid.

”In addition to the fact that such a bid is problematic for the employees of the chain, and the desirability of fostering competition, the responses to the request clearly show that this bid, if and when it wins, would be liable to encounter difficulties from the Antitrust Authority director general, who would probably refuse to approve the acquisition, even if the bid were the highest.”

The Orgad family owns Weed Control Co., Agridev Agricultural Development Co. International and the FM90 regional radio station. The family has obtained the consent of the global Burger King chain for an acquisition of the Israel franchise. The global chain opposes the sale of the franchise to McDonald’s Israel and Burger Ranch.

Other bids for the pricing may still be submitted, and bids already submitted, but which do not meet the minimum price set by the court may be improved. In addition to the minimum price, which is equal to the lowest bid meeting the preconditions, participation in the pricing also requires a bank guarantee.

Published by Globes [online] - www.globes.co.il - on June 16, 2003

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