Castro deal with Hoodies breaks down

The acquisition of a 50 percent stake in Hoodies Ltd. by Castro Model Ltd. has broken down, apparently because Hoodies’s shareholders refused to reduce the price by 10%.

The deal, which was in its final stages, was delayed because Castro wanted to acquire the fashion chain at a value of NIS 90 million, instead of the initially agreed value of NIS 100m. The parties have now broken off talks, and it is possible that there are other disputes between them.

Hoodies operates three fashion chains: the clothing chain Hoodies, which has 40 stores; the accessories chain Top Ten, which also has 40 stores; and the sunglasses chain Carolina Lemke Berlin, with 30 stores.

Hoodies’s main holding is the clothing store chain of the same name, which is responsible for most of the company’s turnover of NIS 180-200m. and profit of NIS 20-22m.

Hoodies founder, guiding spirit and CEO Yossi Gabison-Sasa has for years been the producer of the private label accessories of the New Yorker youth fashion brand. He is known for his close personal ties with the company’s owners, which paved the way for obtaining the Israeli franchise, which he planned to develop together with Castro. Gabison- Sasa will now have to decide whether to sell the franchise.

Castro Model, which has a market cap of NIS 513m., is controlled by the Castro and Rotter families, who hold a 73.3% stake.