Difficulties in acquiring Egged. The three entities that won the tender, Kerso Motors, Migdal Insurance Company and the Aluma Infrastructure Fund, announced today (Tuesday) that they oppose the new demand that Egged placed on them to pay 15% of their bid – a payment of NIS 420 million – until April 25. The amount is derived from an offer of NIS 2.8 billion for half of Egged’s shares, while at the same time Egged’s shareholders are expected to approve the deal.
The three winners stunned the capital market when they offered to purchase half of Egged’s shares at a value of NIS 5.6 billion, and to give the shareholders in the public transportation company the option to purchase the other half of them at this value over three years. The three won an Egged tender to bring in an investor, according to the terms of the agreement it signed with the state, a move that is expected to end by the end of May.
In a letter now sent, the winners confirm that they have been notified of their winnings, but they express opposition to the new demand presented by Egged last Friday, with the announcement of their winnings. “As we informed you at a meeting held yesterday between Egged’s representatives and our group’s representatives, your new proposal that was raised in your announcement constitutes a change in the terms of the deal and is not acceptable to our group,” it was written.
If there are disruptions in the deal, the second group led by the Keystone Fund, which offered about NIS 4.6 billion to buy Egged, may win the tender and set off. As far as is known, last Friday, when Egged announced the winning group and placed the new demand for payment of an estimated sum of NIS 420 million immediately, the second group remained “in the picture”, meaning that it may still finally win the tender.
Egged undertook in an agreement it signed with the state in 2018, which is valid until 2029, to bring in an investor who will hold at least 50% of the company. The first investor bids were submitted last November, and in March the second round took place in which the winning team and Keystone went up. Last Friday, Egged announced the winning team. The scope of the win and the amount the group was willing to pay stunned the capital market and excited the shareholders of Egged.
The company has 1,306 shareholders, with the winning amount meaning a payment to a shareholder of NIS 2.1 million (gross, before deduction of capital gains tax) for the first half of the shares, and the same amount for the second half, as much as they want to realize. The winning group’s plans for Egged include an expansion in the field of transportation, the improvement of the real estate portfolio and even its possible issue, as well as a potential future issue of the company.
Those who were also surprised by the win are Egged employees. The workers’ committee sent a letter to the CEO of Friedman, through his attorneys, Adv. Kfir Zeev and Maya Nuri Shaked from Kfir Zeev Law Office. The committee writes that “the company’s management was expected that such information (about the win, NIS) would be brought to the attention of the workers’ committee even before it was published.”
The committee notes that according to the provisions of the collective agreement from April 2018, the employees are entitled to a bonus derived from the amount of the transaction and stands at NIS 196 million. The committee demanded an urgent meeting with management to summarize the date of distribution of the bonus to employees and added that it requires bringing in an observer to the board meeting to be held following the entry of the future investor.