Bitter coffee: the war over Kofix between Rami Levy and the minority shareholders

Denying the rights of the minority shareholders in Copix or an attempt at extortion?

Depends on who you ask.

While the shareholders claim: "Rami Levy took an entire activity of a network and robbed it", those around Rami Levy claim that this is a move designed to extort money from him.

Levy in response: "I am not in conflict with anyone"

Liat Ron

01/08/2022

Monday, August 01, 2022, 13:35 Updated: 13:54

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Kofix in the heyday of 2014. Started as a great success story but fell into heavy debts (Photo: Afik Gabai)

"Rami Levy took an entire operation of a network and robbed it."

This is what the minority shareholders in Kofix Group claim.

Yesterday evening, another meeting ended without results between the representatives of Rami Levy and the representatives of the minority shareholders in Kofix, who have been conducting a persistent legal battle against him for the past few months, due to a claim of deprivation of their rights.

The "Excellence" trust funds, which hold shares in Copix, also support the minority shareholders.

Levy, for his part, claims that he acted properly and his associates call the moves against him an attempt, apparently, to extort money from him.

The Securities Authority is aware of the controversy, but for now chooses not to comment.

Kofix Group, which is traded on the Tel Aviv Stock Exchange, operates coffee shops and neighborhood supermarkets, which operated, until Levy's entry, under the name "Super Kofix" and were run as a separate economic unit.

The minority shareholders claim that Rami Levy took over the operations of the supermarkets without their consent and is doing them a favor ,

"Rami Levy in the neighborhood" branch in the big shopping mall in Petah Tikva.

He did not hide his desire to establish an urban supermarket chain on the basis of "Super Cofix" branches (photo: Ido Moyal)

In the letters sent to the company's board of directors, the minority shareholders claim that all of the network's branches have been converted to Rami Levy branches in the neighborhood, the large Kofix customer club has been absorbed into the Rami Levy Sycamore Marketing customer club, and the Rami Levy chain's club card is offered to customers in the branches Sycamore Marketing", the chain's suppliers are the same suppliers of "Sycamore Marketing" when 10% of the goods are bought from Levy himself, and those who enter the site of "Cofix Givatayim", for example, reach that of the "Rami Levy Sycamore Marketing" chain, without payment to Cofix.

The minority shareholders in the Kofix Group, represented by

, claim Levy's "controlling shareholder transactions", which require the approval of the shareholders' meeting, without the participation of the controlling shareholder or someone on his behalf, which was not done. In addition, no Every announcement was made to the stock exchange on the matter and the company was satisfied with the approval of the board of directors who approved temporary reliefs,

"Rami Levy brings his purchasing power," says one of the minority shareholders, "but the purchasing power mainly benefits him. He also did not receive approval for the name change from 'Super Kofix' to 'Rami Levy in the Neighborhood' for two years. At the beginning of the year, he convened a meeting In order to approve him paying royalties for the use of the name 'Rami Levy', we objected and the meeting was postponed in order to exhaust contacts with us, but nothing progressed and it was canceled.

Because he had no choice, he 'approved' the use of the name 'Rami Levy' until the end of 2022 Without payment, when he is on the road he cuts commissions from suppliers and strengthens his brand at our expense. In the simplest words: Rami Levy took an entire operation of a chain and robbed it. We sent a request to the board of directors and asked for a response to our claims through the lawyer and the answer we received is that Levy is doing us a favor when he uses in his great purchasing power and this entitles the company, which can be interpreted as an attempt to extort the minority shareholders."

"Because our goal is to act by the book and we are trying to exhaust what is possible without involving her in the meantime. We estimate the damage done to us at tens of millions of shekels. A representative on our behalf negotiated with him about buying us out, but nothing progressed yesterday either."

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Rami Levy drinks Cofix.

According to him he has no conflict with anyone.

His associates claim that this is an attempt to extort money from him (Photo: Yehats)

Kofix was founded by

in 2013 and sold coffee at a fixed price of five shekels, became a hit, shook the market and caused the price to be lowered in the competing coffee chains.

A year later, the first supermarket of "Super Kofix" was opened, and in 2015 the company began trading on the Tel Aviv Stock Exchange. In 2016, the coffee shop chain expanded to Russia, through a group of investors.

In 2018, "Kofix Group" suffered losses of over 800 million Shekels, and Rami Levy purchased 20% of the company's shares - and later increased his holdings to 50.01% in Israel and to 42% in "Cofix Global", the company that concentrates the activity in Russia, which includes 207 coffee shops. Following the war in Ukraine and the depreciation of the ruble, the company also found itself Russian for difficulties.

Levy did not hide his desire to establish an urban supermarket chain on the basis of "Super Cofix" branches - and so he did.

He converted a large part of its branches to the "Rami Levy in the Neighborhood" brand, using his purchasing power to keep prices low.

As of today, the company operates 37 supermarkets under the name "Super Kofix" and "Rami Levy in the neighborhood" and 68 coffee branches.

It should be noted that, at least in terms of balance sheets, Levy's activity led to an improvement: Kofix ended the year 2021 with an 8.7% increase in sales, which amounted to NIS 303 million.

Thanks to the 8.3% increase in grocery sales that was registered following the opening of four new stores and the conversion of the "Super Cofix" branch to "Rami Levy in the city", the annual loss was reduced to NIS 8.6 million.

At the end of the process, Rami Levy wants to merge "Cofix" into "Rami Levy Sycamore Marketing" and save himself the headache of the minority shareholders.

The merger could be a solution,

From this it seems possible to understand the bickering and the position of the minority owners who claim that their rights have been violated (but refrain for the time being from applying to the National Property Authority, when the alleged threat to Levy is pending), as well as the claims of parties defined as "close to Rami Levy" for what they define as an attempt to extort Rami

that he is not aware of a meeting held with the minority shareholders and that he is not in conflict with anyone.

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• Rami Levi

• Cofix

• Real Estate Authority