European Sakata Holding SAS, a subsidiary of Sakata Seed Corporation, Yokohama, Japan, one of the world’s largest vegetable and flower seed companies, confirmed today that it is intending to acquire a controlling interest in Zeraim Gedera Ltd., a prominent Israeli vegetable seed company, through the exercise by certain minority shareholders of their legal right of first refusal to shares of other stockholders being offered to a third party. 

On August 4, stockholders controlling 61.7% of Zeraim Gedera entered into an agreement to sell their shares to Markstone, an Israeli buy-out firm, at a valuation of $40 million, plus potential performance-based payments of up to $12 million at the conclusion of the 2006 fiscal year.  Markstone has acknowledged in writing to the selling stockholders that the agreement to sell their shares to Markstone is subject to the right of first refusal of the remaining stockholders to purchase those shares on the same terms.  On September 2, the non-selling shareholders exercised that right of first refusal with an offer valuing the company at $52 million, rendering the agreement with Markstone null and void.

Markstone challenged this legal right of the minority shareholders in court on September 9 and had its motion to place an injunction on the sales of shares to the minority rejected by the court.  The parties are now to file briefs to the court for further jurisprudence.  For reasons best known to itself, Markstone has also attempted to intimidate Sakata and the minority shareholders into withdrawing the minority offer, both of which have been unsuccessful.

Related news release: Zeraim Gedera statement on the sale of part of the Company’s shares