Terminal X acquires Israeli sportswear brand

Terminal X announced this morning to the stock exchange the signing of a memorandum of understanding with Strongful, a sports and workout clothing brand established in 2020 that sells its products online.

According to the agreement, Terminal X will acquire 51% of the brand for an undisclosed sum. The founders, who currently serve as co-CEOs, Yarden Deutsch and Dor Kedem, will hold 49% of the new company that will be established under the partnership. The deal is subject to the completion of due diligence. The memorandum of understanding stipulates that the founders will continue to serve as co-CEOs for a minimum defined period.

The company's value will be calculated based on Strongful's net profit multiplier according to audited reports for 2023, based on zero net debt and normative working capital. Additionally, Strongful will be entitled to future contingent compensation to be paid during the first half of 2025, according to a mechanism established in the memorandum.

Terminal X notes that the brand, founded in 2020, "offers a wide range of activewear for women, with high-quality finishes, a wide size range, fair pricing, and quick turnover. It has succeeded in creating a desirable brand and a loyal customer base, mainly aged 18-40, in a relatively short time. The company sees the deal (if and when completed) as an important step in implementing its strategy to expand its activities in the fashion and lifestyle sector."

Furthermore, at the company's discretion, during 2027 or 2028, Terminal X will have the option to purchase an additional 24% of Strongful's shares based on the company's value, derived from the net profit multiplier of 2026 or 2027, as applicable.

This is not the first time Terminal X has acquired a young Israeli brand. In 2022, it acquired Sisterz, a women's clothing brand established by sisters Alona and Daniela Tzur.

Yesterday, Fox, owned by Harel Wizel, who also owns Terminal X, reported to the stock exchange that it lost a major contract to open a chain of coffee shops in Israel. According to the report, the international chain Pret A Manger, with which Fox signed an agreement last year to establish 40 coffee branches in Israel, withdrew from the agreement and canceled Fox's license, citing the war.

"On May 30, 2024, Pret announced its decision to cancel the license agreement, citing a force majeure event due to the war that began on October 7, 2023, and its alleged impact on Pret's ability to perform the necessary preliminary actions to commence operations under the license agreement," it was reported.

Fox further reported that "according to the company's legal advisors, there are valid claims against Pret's cancellation of the license agreement and regarding the company's rights under the agreement. The company has responded to Pret through its legal advisors, rejecting Pret's notice and the reasons included therein."

Pret A Manger specializes in quality coffee and freshly prepared food, with over 600 branches in 15 different countries across Europe, North America, and Asia. Pret A Manger was founded in London, England, in 1986, where its headquarters are located, and employs over 13,000 people worldwide.

The establishment of the coffee chain was supposed to be Fox Group's first foray into the food sector. At the time, the company stated that "it is an important step in diversifying the group's brand portfolio and expanding its areas of activity." The company was supposed to invest approximately NIS 36 million in the first three years.