Is Rami Levi What Mega Needs to Cross from the Sea of Red?

News has it that Rami Levy (the man) is the guy who will save Mega. In February, this blog offered “Three Reasons Why Blue Square Won’t Win Israel’s Supermarket War“. Today comes speculation that Rami Levi (the stores) is in talks to buy Mega/You supermarket chain from Alon Blue Square Israel Ltd. (NYSE:BSI).

With the usual caveats of “only initial talks have taken place” and “odds are low” that any deal would ultimately happen, it does hint that stores are in play. That’s good news for Alon shareholders and perhaps for Israeli consumers. Not clear what it could mean for shareholders in Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. (TASE:RMLI). rami

For Alon shareholders, shedding Mega would give the company much-needed cash and relief from dealing with a unionized workforce. Rami Levy (the man) isn’t the only savior out there. One likely buyer that comes to mind is Apax Israel, flush with about $2 billion in cash from the sale of Tnuva to China’s Bright Foods.

But if Mr. Levy does emerge as a buyer, the good news for Israeli consumer would be a possible break-up of Mega’s network, which ranges from the urban makolets to the industrial zone/periphery big-box locations. Mar Levy doesn’t like small stores, so could likely either not include them in an eventual purchase or sell them off.  That could also mitigate concentration concerns from the government.

Stay tuned. Summer’s just getting started.

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