Caesarstone Begins Process for IPO

Artcle updated on March 12 with share/price information.

The Israeli parent company of Caesarstone took the first step last month for an initial public offering (IPO) of stock.

Caesarstone Sdot-Yam Ltd. filed a F-1 registration statement on Feb. 16 with the U.S. Securities and Exchange Commission (SEC), starting the process to issue shares of the company through NASDAQ.

An updated filing on March 6 noted that the company will offer 6.66 million shares at an initial price of $14-$16. When offered, however, Caesarstone will trade under the CSTE symbol on the NASDAQ Global Select Market.

An IPO for Caesarstone became the topic of several reports in the Israeli financial press as an investment fund increased its ownership in the past 18 months, and the company bought out its U.S. distributor last May.

Currently, 70.1% of Caesarstone’s shares are owned by Kibbutz Sdot-Yam – the collective community that launched the quartz-surface product 25 years ago this month – and the remainder is held by Tene Investment Funds, a Tel Aviv firm that targets kibbutz-based industries.

While final numbers aren’t available, the F-1 statement details the use of some proceeds that have a connection to Caesarstone’s U.S. operations.

The parent company initially bought 25% equity in U.S. Quartz Products – Caesarstone’s U.S. distributor – in January 2007 for $9.9 million. Last May, Caesarstone Sdot-Yam acquired the rest of the distributorship for an initial $20 million and other considerations, including the repayment of $5.5 million in loans and getting a four-year non-compete agreement from the distributor’s shareholders and CEO.

The former distributors will also receive $6.5 million in proceeds from the IPO if the stock goes on sale before May 31 this year. (That drops to $5 million if the IPO isn’t forthcoming.)

Caesarstone will also earmark $25.6 million in IPO proceeds to pay a special dividend to current shareholders. (None are U.S. citizens.) The company also indicates in the SEC filing that it may use IPO money to expand production capacity, either with a new production line (estimated at $30 million) by 2014 or other means, including an acquisition.

According to the SEC filing, Caesarstone recorded 2011 worldwide revenues of $259.6 million and a net income of $29.3 million. The company’s U.S. revenues last year were approximately $59.7 million.

Caesarstone estimated its market share in U.S. quartz-surfaces sales at 29 percent in 2010, according to the filing. The estimates also pegged all quartz-surface sales at 9% of the entire U.S. countertop market in 2010.

 Source: Caesarstone F-1 filing, February 2012

Get all the latest in the industry with The EDGE, the e-newsletter from Stone Update. Free subscriptions are available here.