Less than a week after they sold a significant portion of their holdings busually Barak Rosen and Assi Tuchmayer liquidate most of their remaining position in the yielding real estate company controlled by Alfred Akirov – this at a lower profit than they expected.
● A 20% discount on the market price: Barak Rosen and Assi Tuchmayer chase the dreams
● The Capital Market Authority prohibits Akirov from acquiring control at all through Alrov
With the opening of the trading week she reported Israel Canada of Rosen and Tochmayer that she sold to Elrov about 9% of Elrov’s capital for NIS 285 million, and an additional small share amounting to NIS 23 million to the provident funds of the Moore Investment House (which purchased over 4% of Elrov’s shares from Israel and Canada last week).
In doing so, Rosen and Tochmayer completed the sale of most of their shares in Alrov for NIS 458 million within a week and were left to hold only about 1% of the company’s capital worth about NIS 50 million. Although the realization of Israel Canada’s holdings was carried out at a deep discount of 20% below the market price, it is still an investment that yielded a handsome profit of approximately NIS 60 million.
However, since Israel Canada previously accrued a much higher profit of approximately NIS 150 million for this investment, based on the market price of Alrov shares, it is expected to make a downward adjustment of the investment value by more than half of the profit it recorded in the past.
The shares that Elrov has now purchased from Israel Canada will become dormant, which reduces the registered capital for trading. As a result, the holdings of the controlling owner Akirov will increase to 86%, while Mor Gemel becomes the largest shareholder from the public in Arov with about 6% of the capital.
Alfred Akirov / Photo: Yossi Cohen
Alrov has committed to Israel Canada that if during the next two years (24 months) it becomes a private company, whether for example through a purchase offer, merger or own purchase, and the price per share in that transaction is higher than NIS 142.5 (according to which the deal was closed between the parties), it will pay Alrov to Israel Canada Additional consideration of 10% of the purchase price from the public. Akirov, let’s remember, may make the company private in order to obtain the permit to control the company Clal Insurance .
Malerov stated that the price at which its shares were purchased in the transaction “is attractive and the self-purchase of the company’s shares, at this time, constitutes, in the opinion of the board of directors, a proper business and economic opportunity. The transaction, in light of its data, is in the company’s favor, reflecting an opportunity price both in relation to the traded value of the share and in relation to capital the self of society”.
In response to the report, the Israel Canada stock retreated, after rising by 25% since the beginning of January. In the last year, the investors in the stock are still losing about 55% and the market value of the company is estimated at NIS 2.9 billion. Israel Canada’s shekel bond (G ) is now trading at a yield to maturity of 7.1%, lower than the 9.4% yield at which it traded at the end of last December.
They were hoping for a “change of generations” in Arov
The purchase spree of the energetic entrepreneur duo Rosen and Tochmeyer in Alrov shares began almost two years ago when in March 2021 Israel Canada completed the purchase of a package of shares of about 13% of Alrov Real Estate shares from Clal Insurance (after its managers got into a conflict with Akirov) for about NIS 382 million.
To finance the bulk of the purchase, Israel Canada took out a prime interest loan of NIS 200 million. Later in 2021 and during last year, Israel Canada continued to purchase shares of the company, which operates in the fields of profitable real estate and luxury hotels in Israel and abroad, at the end of which it held a share of approximately 15% of Arov.
Rosen and Tochmayer estimated that the entry into investment in Alrov Real Estate (similar to the aggressive investment they made last year in the shares of Norstar of Haim Katzman) may be a springboard for the acquisition of control in the future, if it is offered for sale.
Rosen even said in the media, in what seemed to be a hint of his intentions, that a day will come when there will be a “change of generations” in Arrov. Akirov dismissed his words and even claimed to the pair that they “talk nonsense, I have never seen a cockroach swallow an elephant”.
In retrospect, it turned out that the experienced Akirov saw what was born. Israel Canada’s rapid expansion campaign through purchases “from the ready” was halted last year when the interest rate hikes in the economy began. The company, whose business has grown rapidly in recent years thanks to the aggressive initiation of residential construction projects in the center of the country, was required to recalculate and is now working to increase liquidity in favor of its core business.
And if Israel and Canada come out with a profit in Arrov, then the investment in Katzman’s Norstar shares, in which it tried to carry out a hostile takeover move, caused it a heavy loss. As of today, Israel Canada owns 22% of Norstar’s shares, in which it invested a total of NIS 358 million and on which it loses approximately NIS 200 million on paper. the global G City ), it is expected to be diluted in its holdings.