Hamama and Ultra: How much value really remains for current shareholders if the deal closes

The main article already showed that Hamama's 2025 profit improvement did not come with easy cash. This follow-up isolates the question that really determines shareholder economics around Ultra: not whether the transaction sounds strategic, but how much value can actually be paid out in cash, how much gets rolled into a minority stub in the new company, and what has to happen in between for the accounting value on the balance sheet to turn into distributable cash.

Four things matter right away:

• The self-tender is not a side feature. The transaction does not close without a buyback of Hamama shares for at least ILS 50 million.
• The real number is ILS 80 million, not ILS 50 million. The company wants to keep at least ILS 30 million of net cash after the buyback, so it first needs to generate ILS 80 million of cash inside the company.
• That cash was not sitting in the bank at the end of 2025. Cash and cash equivalents were just ILS 5.3 million, while most current value sat in ILS 101.9 million of inventory and ILS 68.3 million of receivables.
• Anyone who does not tender is left with a much smaller stake than the headline may imply. Ultra holders receive securities equal to 55.26% of the fully diluted company even before the tender effect, and that climbs to 76.85% if the tender is fully subscribed.

This is a two-layer distribution, not just a merger

What matters here is not only that Ultra is entering a public shell. The annual report lays out a structure that splits current shareholder economics into two separate pockets: one pocket is cash that is supposed to come out through a self-tender, and the other is the stake that remains for shareholders who do not tender and continue into a company whose only operating activity is supposed to be Ultra.

The practical implication is that current shareholders are not simply exchanging a food-trading business for a non-bank credit platform. They are going through a double event: first, a partial cash exit through the tender, and second, a roll-over of whatever remains into a minority interest in a very different company.

This is also where the current disclosure gap shows up. The report gives plenty of detail on the shell-side mechanics, but it does not yet provide the full Ultra side of the story. Mutual due diligence was extended to March 28, 2026, and Ultra's prospectus-level materials, board report and financial statements are supposed to be delivered by April 15, 2026. So today the market can quantify dilution and liquidity pressure on Hamama fairly well, but it still cannot fully price the quality of the asset that non-tendering shareholders are expected to keep.

The old value sits in working capital, not in cash

This is the center of the story. Hamama did not approach the Ultra deal with a large cash pile at the end of 2025. It approached it with a large working-capital base and a quick ratio of exactly 1.00. In other words, without converting inventory and collecting receivables, there is no meaningful liquid cushion here.

At year-end the company had ILS 177.9 million of current assets, but ILS 101.9 million of that was inventory and another ILS 68.3 million was receivables. Cash, again, was just ILS 5.3 million. The quality of that working capital is mixed. On the positive side, 74% of customer credit is covered by credit insurance. That helps. On the other hand, the report explicitly says that the company also extends credit to customers in the Palestinian Authority that is neither collateralized nor insured. So the receivables book is not the same thing as cash.

Inventory is not "cash in disguise" either. The reported inventory balance already includes an ILS 3.9 million inventory write-down, so the accounting number is not completely untouched by prudence. But it still has to be monetized in real life. The composition matters: ILS 49.8 million sits in company warehouses, ILS 31.7 million sits in ports, cold storage and bonded warehouses, and another ILS 20.4 million is inventory in transit. That is stock that still has to move through a supply chain, be sold and be collected before it becomes clean distributable cash.

That chart explains why the ILS 50 million headline is harder than it looks. Inventory days stretched to 185 from 154, customer days stayed very long at 95, and supplier days compressed to 36 from 62. That is the opposite of what a company wants to see if it needs to clean up liquidity before a major payout. More cash got trapped in stock, and supplier credit became shorter rather than longer.

In all-in cash flexibility terms, 2025 did not create a payout cushion. Operating activities consumed ILS 7.5 million, lease liability repayments came to ILS 6.2 million, and cash on the balance sheet did not grow. The financing bridge that held the year together was mainly ILS 13.7 million of additional short-term bank credit. So the company entered the Ultra deal not from surplus cash generation, but after leaning more heavily on short-dated bank funding to carry a bulkier working-capital position.

That waterfall shows book net working capital of roughly ILS 101.8 million. It is an important number, but it has to be read correctly. It does not mean Hamama already has ILS 101.8 million available for distribution. It means the balance sheet has enough current assets to potentially generate the cash required by the deal, if the sale of the existing business, inventory and receivables really converts accounting value into clean cash, and does so quickly enough.

The number that matters is ILS 80 million, not ILS 50 million

The easiest mistake on first read is to focus only on the size of the self-tender. In practice the agreement creates a double liquidity hurdle: the tender itself must be at least ILS 50 million, but the company also says at least ILS 30 million of net cash has to remain after it. That means the real pre-tender cash target is ILS 80 million.

This is where the discussion has to slow down. At the end of 2025 Hamama had ILS 5.3 million of cash. It also had ILS 45 million of short-term bank facilities, of which ILS 15.7 million was unused at year-end and ILS 19.8 million was unused near the report date. That clearly gives the company room to operate, but it does not solve the transaction. A bank line is not free distributable cash, and certainly not a substitute for generating ILS 80 million inside the company before paying out at least ILS 50 million.

That is why the sale of the existing food business and inventory is not a technical footnote. It is the real funding engine of the transaction. If that sale happens at a discount, too slowly, or with material leakage toward short-term debt, suppliers and other obligations, then the value that ultimately reaches current shareholders will be lower than the raw balance-sheet numbers suggest.

This also means the next important date is not the closing date itself, but the next round of disclosure around Ultra and the shareholder meeting. That is when the market should be able to judge whether the company has a credible bridge from balance-sheet value to distributable cash, rather than just a strategic headline.

Bank constraints turn theory into an execution test

This may be the least obvious but most important part of the whole setup. The report says the company does not have numeric financial covenants with its banks. On the surface that sounds comfortable. But the same credit agreements contain other restrictions, and in this transaction they may matter more.

First, some of the bank agreements include standard cross-default language and a change-of-control clause that can trigger immediate repayment if control changes without prior written bank consent. In a transaction where Ultra holders are supposed to appoint up to five directors and a new management team, while the current officeholders step down at closing, this is not a footnote. It does not appear as a standalone closing condition in the merger agreement, but it is clearly a real execution line item.

Second, Hamama undertook not to pay a dividend, carry out a buyback or make any other distribution unless several cumulative conditions are met. The key one here is that equity after the distribution must remain above 20% of total assets and above ILS 75 million. At the end of 2025 equity stood at ILS 106.9 million. Subtract a distribution of ILS 50 million and the remaining equity falls to roughly ILS 56.9 million, well below the ILS 75 million floor, even before considering the requirement to leave ILS 30 million of net cash in the company.

That is the key friction. It means the planned ILS 50 million tender does not naturally sit on Hamama's current year-end numbers. For the deal to work, something else has to happen on the way: either the balance sheet has to be cleaned up and equity has to look different after the sale of the business and debt reduction, or additional consents and approvals have to soften the bank restriction, or both.

There is one constructive datapoint. Between December 31, 2025 and near the report date, net bank credit fell by ILS 6.4 million, mainly shekel credit. So the company has already started moving the balance sheet in a cleaner direction. But that improvement needs to be kept in proportion: a ILS 6.4 million reduction in bank debt is helpful, not decisive, when the transaction still depends on creating ILS 80 million of cash before the tender.

This sits alongside a fairly tight interim-period regime. Until the deal is completed or terminated, the company may not issue new securities, approve officer compensation, hire employees or enter into new loans or credit lines, unless the agreement explicitly allows it or the parties consent. In other words, the exact period in which Hamama needs to sell the old business, collect cash and rebuild the capital structure is also a period in which management flexibility is narrower.

So what is actually left for current shareholders

The short answer is that current shareholders are not getting one value bucket. They are getting a two-layer package.

The first layer is immediate cash, if and when the self-tender is approved and executed. That is the only part of the package where one can talk about relatively direct monetization, and even that still depends on Hamama turning its 2025 balance sheet into clean distributable cash. Without selling the legacy business and monetizing working capital, the transaction does not have a sufficient cash base.

The second layer is a residual stub. Anyone who does not tender remains with a smaller stake in a company whose only activity is supposed to be Ultra. The report gives two clear anchor points: before the tender effect, Ultra holders receive 55.26% of the fully diluted company; under full tender participation, they rise to 76.85%. That leaves current Hamama holders somewhere between 44.74% and 23.15%, with the actual endpoint depending on tender take-up and the final number of shares repurchased.

If the tender is executed in its maximum share amount of 8,907,931 shares, only 5,461,186 shares from the current base remain in the hands of non-tendering holders. At that point the bet is no longer on a recovery in Hamama's food-trading business. It is a bet on the quality of Ultra and on the price at which Hamama can turn the old business into cash.

That is exactly what the market still cannot fully price. The annual report does not yet include the Ultra disclosure package that the company is supposed to receive by April 15, 2026. So a shareholder reading the deal today can quantify Hamama-side dilution and liquidity pressure, but still cannot fully value the residual share he or she would own by staying in.

In that sense, this looks less like a standard merger and more like a forced value split: one piece is supposed to come out through the self-tender, and the other becomes locked inside a minority stake in a new company that is still only partially disclosed. That is why investors should spend less time on Hamama's 2025 accounting profit and more time on whether a working-capital-heavy 2025 can realistically become a clean-cash 2026.

Bottom line

The thesis is fairly sharp. The Ultra transaction can create value for Hamama's current shareholders, but only if two conditions are met together: Hamama has to convert the value stuck in inventory and receivables into clean cash that can actually be distributed, and Ultra has to deliver documents that justify the residual minority stake that shareholders would keep. Without both, the ILS 50 million self-tender headline looks stronger than its real economics.

What the market can easily miss on first read is that the deal is not funded by existing excess cash. It depends on an orderly dismantling of the legacy food business and on a capital-structure cleanup on the way. What supports the thesis for now is the existence of more than ILS 100 million of book net working capital and the fact that the company already reduced bank credit after year-end. What weighs on it is that 2025 operating cash flow was negative, inventory stretched, and the bank undertakings do not look naturally compatible with a ILS 50 million payout on the current numbers.

The real question for current shareholders today is therefore not "what is Ultra worth," but how much of Hamama's working capital will actually turn into clean cash before the deal closes.