Group Discount Investments (DSK), headed by Chairman Tzachi Nachmias, is progressing towards the completion of the plan to reorganize its investments in real estate, through its subsidiary Properties and building. As part of the plan, the group is expanding its holding in the Gav-Yam-producing real estate company, at the expense of selling its other properties and building activities.
Properties and building Reported success on the partial takeover bid that it submitted to 5% of Gev-Yam shares for about NIS 440 million, after the owners of 7.08% of the company’s shares responded positively to the offer. The person who chose not to respond to it is the businessman Maurice Wilner (one of the controlling owners of the Arco gas station company), who owns 5.15% of Gev-Yam. As a result of the success of the move, assets and a building will record a capital gain of approximately NIS 1.1 billion in the first quarter of 2022.
At the same time, Properties and Building also reported the completion of the transaction for the sale of a property in Tel Aviv to a partnership of Delek Properties (controlled by Lahav L.R.) and Azorim, controlled by Hershey Friedman. The property was sold for NIS 390 million. , To be recorded in the fourth quarter reports of 2021.
On the way to a 87% holding in Gev-Yam
The success of the takeover bid in Gev-Yam will increase the holding rate of properties and building in this company from 44.51% to 49.51%. It was filed because it is the permanent way in the Companies Law for aliyah beyond the 45% holding rate in a subsidiary over which it has no controlling shareholder.
In practice, the takeover bid was intended to allow Properties and Building to complete the transaction for the purchase of 37.22% of Gev-Yam shares held by businessman Aharon Frenkel, for approximately NIS 3.1 billion (subject to adjustments stipulated in the agreement between them). Following the completion of the acquisition, Frenkel will hold assets and a building in 86.73% of the shares in Gev-Yam, which is traded on the stock exchange at a value of NIS 8.5 billion.
It should be noted that at the time of publishing the tender offer, Properties and Building clarified that it had no plan or intention to act to delete Gev-Yam’s shares from trading on the stock exchange, or to make another purchase offer for Gev-Yam shares after purchasing the company’s shares from Frenkel. However, this announcement will not preclude another possible move for a merger between the two companies, for example by way of a reverse triangular merger (reverse merger).
In such a case, Gev-Yam will actually purchase the entire shares of Properties and Building (which is traded at a value of NIS 3.3 billion) in a share transaction, so that Gev-Yam will remain a public company while Properties and Building will become a privately owned company, or be completely liquidated. Such a move would reduce DSKS’s control pyramid (which is a company without a controlling shareholder) from three layers to two, bring it closer to Gev Yam’s operations, strengthen Gev Yam’s equity and re-increase the public’s holdings in it.
However, this is a complex process that will require the decision of the boards of directors of the two companies to establish independent committees for the purpose of negotiating the outline of the transaction, and then will also require the approval of the boards of directors and minority shareholders in each company.
Following the success of the tender offer, Properties and Building will begin to consolidate its financial statements in its financial statements Back-sea. As a result, Properties and Building is expected to post a profit in the first quarter of 2022 due to the difference between the value of the investment in the books prior to the acquisition and the fair value of the investment at the time of acquisition.
This profit estimate will be calculated on the basis of the difference between the value of the investment of properties and a building in Gev-Yam, on the date of the acquisition, and the value of this investment according to the last closing price of Gav-Yam shares on the stock exchange at the acquisition. As of today, this profit is estimated at NIS 1.1 billion.
“The cornerstone of DSK’s strategy”
Gev-Yam is engaged in income-producing real estate, and specializes in the initiation, construction, and management of high-tech parks, office and commercial buildings and logistics and industrial centers. “We are pleased with the success of the tender offer and see it as an expression of trust on the part of the market in a real estate and construction company.”
Cohen added that “Gev-Yam is an excellent company, one of the best income-producing real estate companies in Israel, with huge potential for growth and expansion. Gev-Yam is the cornerstone of DSKS ‘strategy and we will work together with the company’s excellent management for continued growth. And prosperity. “