Lessons of the Non-Tech Acquiring Tech Deal Of The Month

August 2022: Remi Levy invests in Cando Drones

On 22nd August 2022, Rami Levy Chain Stores Hashikma Marketing 2006 Ltd., the third largest Israeli retail supermarket chain, made a strategic investment in a drone company, Cando Drones. The deal is another step in Rami Levy’s vision to create a system for operating a fleet of autonomous drones for the purposes of security and transportation.

Tech – Cando Drones: Cando Drones is an aviation company that establishes and manages autonomous drone systems. The company provides a turn-key solution that includes the organisation of the aerial space, regulation, characterization, choosing and integrating systems, ground logistics management, implementation, training, professional and technical guidance which allows the maximum utilization of capabilities with drones for a variety of needs. The company offers a charging station for drones, security solutions, shipments, solutions in the field of Public Safety, documentation, mapping, and control services, thereby helping clients by enabling the capabilities in the field of drones for multiple needs.

Non-Tech – Rami Levy: Rami Levy Chain Stores Hashikma Marketing 2006 Ltd is an operator of clothing and food retail stores. The company generates the entirety of its revenue domestically. The company operates a chain of supermarkets as well as discount clothing and discount shoe stores and markets its own products under the brand names The Motag as well as Rami Levy Shivuk Hashikma. In addition, the company operates a real estate development branch and engages in wholesale distribution activities.

TRANSFORMATION OF THE RETAIL INDUSTRY – IT’S HAPPENING

On 22 August 2022, Rami Levy led a strategic investment round of an undisclosed amount in Cando Drones.

Founded in 2019, Cando Drones focuses on projects of public safety, services provided to municipal bodies (supervision and enforcement, documentation, modelling, emergency response), security and deliveries.

At present, the company is a provider of drone-based security services for strategic facilities, municipalities, and a medical cannabis plant. It also has the know-how on the command, control, and operation of drone fleets, for delivery purposes and provides charging stations for drones.

This techquisition deal demonstrates Rami Levy’s ability to adapt to technological shifts and to serve consumer needs.

"It's not the full commercial process yet, but we're building every part of the chain, step by step. The first pilot project will be between Rami Levy's logistics centre and the Ishpro shopping centre and on the way back the first customers will be Rami Levy's employees"
- Julia Katz, Vice President of Strategy and Infrastructure, Cando

The deal rationale revolves around Rami Levy’s goal of creating a system for operating a fleet of autonomous drones for the purposes of security and transportation, from the stage of the order by the customer to the completion of the mission.

Rami Levy plans to operate a fleet of hundreds of drones, which will operate simultaneously as part of a delivery network.

“Rami Levy’s priority is to develop a system that will allow it to fly hundreds of drones from one control room to several destinations”

- Spokesperson, Rami Levy Chain Stores Hashikma Marketing 2006 Ltd.

ANOTHER TECHQUISITION DEAL PAYS FOR ITSELF

Like most other techquisition deals, the market reacted favourably to the investment announcement given the positive outlook associated with the strategic potential of the investment and how it fits with Rami Levy’s business strategy.

Rami Levy’s share price increased by approximately 5.5% from the 22nd August to the 28th August – versus a decrease of 0.3% in the Israel index TA-125 – implying an immediate addition of shareholder value of a net ca. $70 million (which was likely to have been greater that Rami Levy’s investment amount).

THE DRONE MARKET IS EXPLODING

The size of global commercial drone market is estimated to grow from $14.8 billion in 2021 to $217.0 billion by 2027 (CAGR of 56.4%).

CLEAR TRANSFORMATIONAL OPPORTUNITY

With the rise of e-commerce, developing a robust last-mile delivery service emerged as a critical factor for retailers.

Leading public-listed retailers are introducing various autonomous last-mile delivery solutions such as autonomous robots, self-driving delivery cars, vans, and trucks, as well as delivery drones to provide swift package delivery to customers.

The trend of involvement and investment in the field of drones by influential financial factors is expanding, both in the global market and in Israel.

The techquisition investment in Cando Drones completely aligns with Rami Levy’s goal of creating a comprehensive system for operating a fleet of autonomous drones, for security and transport purposes.

The strategic logic is clear: the investment in Cando Drones should help enable Rami Levy to seamlessly integrate technology into its services, offering a unique and innovative solution to its customers that fits in the company’s long-term brand strategy.

THE QUOTE

“Rami Levy's strategy is to put the customer at the centre. Using the drones, we intend to develop a system to operate a fleet of autonomous drones within which Rami Levy's customers will be able to order deliveries via drones directly from our online ordering website or from the app”

- Rami Levy, Founder, Rami Levy Chain Stores Hashikma Marketing 2006 Ltd

Rami Levy’s investment is a great example of how a traditional business belonging to the retail and grocery market industry is actively engaged in the journey of transforming itself to deliver greater value to its stakeholders – particularly its shareholders and customers – by properly positioning itself for the future, ready to tackle any disruptions, especially in a pandemic.

The essence of such a transformation unfolding is embedded in a strategy execution approach we have trademarked and call Techquisition, which my firm, Aquaa Partners, has designed and delivers to its clients every day as an experienced and trusted expert partner.

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