If previous options granted are exercised, the amount that will go into the company’s coffers will be NIS 247 million. The issue of the rights will take place even before the distribution of Gazit Globe’s shares as an in-kind dividend, so that the manner in which they will be distributed among Norstar’s current shareholders will be determined only after it is known which of them exercised their right to participate in the raising.
There is indeed such a discount, but it has decreased significantly in the face of a 60% increase in Norstar shares since the beginning of the year, while Gazit Globe shares have risen by 19%. Prior to the announcement of these two moves, the market value of Norstar’s holdings in Gazit Globe is NIS 2.5 billion, while the market value of Norstar is approximately NIS 2 billion. The shares of the two companies responded to the news with declines, and the market value of Norstar fell to NIS 1.8 billion, while that of Gazit Globe fell to NIS 4.8 billion.
In addition, and this is perhaps the most important point, Norstar states that it is preparing to make moves that will later take it out of control of Gazit Globe, thereby also reducing the restrictions that apply to holding companies. Norstar also believes that this move will increase the stock’s marketability.
When it comes to raising capital by issuing shares, Norstar explains that the move will strengthen its capital structure “while reducing net debt and reducing leverage.”
These explanations make Norstar’s board members – chairman Moshe Ronen, Bat-Ami Katzman, Katzman’s daughter, executives Eliyahu Shachar and Shmuel Messenberg, and independent director Eden Avitan – look like independent puppets.
It is hard to believe that after many years, in which all of Norstar’s activities amounted to controlling Gazit Globe, they suddenly discovered that this construction was not ideal for shareholders. It is more likely that the board of directors made a decision that is in line with the wishes of Katzman, who serves as CEO of Norstar and as deputy chairman of the board.
And this is the place to reach the path of the sermon. In practice, and above all, this is Katzman’s aggressive move on his way to fortifying his control of the Gazit Globe group. In fact, Katzman is bringing Norstar’s shareholders closer to Gazit Globe, in order to rule out the possibility that someone will take over. And at this time, “some factor” refers first and foremost to Barak Rosen and Assi Tochmeier. But not just to them.
Katzman currently owns 27.7% of Norstar, and is defined as the controlling shareholder. The second largest shareholder is Israel Canada, controlled by Rosen and Tochmeier, which holds 22.6% of the shares. The two came to this holding during what was then seen as their success in bending Katzman.
As part of this transaction, it was determined that Israel Canada will not increase its holding of over 22.6% in Norstar and will not appoint directors on its behalf. This is mainly so as not to clash head-on with the Centralization Law, as high holding and holding on the board could have formally made Israel Canada and Katzman cling to control of Norstar, which would have created a three-tiered public pyramid contrary to the Centralization Law (Israel Canada-Norstar-Gazit Globe).
After the announcement, Katzman spoke publicly several times and said that he did not intend to leave the stage and that he intended to continue to be in control. It now becomes clear how he intends to do so: reducing Norstar’s stake in Gazit Globe, while clearly stating that it intends to lose control of the company later on, makes taking over Gazit Globe much more difficult. Norstar, as mentioned, is traded at a value of NIS 1.8 billion, and at the beginning of the year was traded at a value of only NIS 1 billion.
In other words, Rosen and Tochmeier saw before their eyes the possibility of taking over Gazit Globe, which has assets of NIS 40 billion, from above, with an investment of several hundred million shekels. Now Katzman is transferring the battle to Gazit Globe itself. Whoever wants to take over it will have to buy shares in both Norstar and Gazit Globe, and later, only Gazit Globe. And this is already a much more expensive move, because of the significantly higher value of Gazit Globe.
When the game of chess between the parties began, Katzman seemed to be in an inferior position. He played the game with his own pocket, while Rosen and Tochmeier participated in the game with the coffers of Israel Canada, whose equity at the end of 2021 was NIS 1.7 billion. And here, through the retreat he made against Rosen and Tochmeier, which now looks like a tactical retreat, he improved his situation.
First, he has NIS 192 million he received from the two, with whom he can purchase shares in the rights issue and even increase his share, if there are shareholders who choose not to participate in the issue. Second, he will be able to buy shares relatively cheaply, since he sold each share to Israel Canada at a price of NIS 50 and will now be able to buy shares at a price of NIS 40. Third, when he agreed to sell a stake in his shares, it was done in exchange for Israel Canada not appointing directors on its behalf at Norstar. That is, Rosen and Tochmeier had no way of influencing the decision of the board of directors, which approved these two moves.
These moves by Katzman angered minority shareholders. Rosen and Tochmeier, representatives of the Sifra Foundation, Itzik Sela (who owns 4.8% of Norstar) and Rami Levy (who owns 5%) gathered in the latter’s offices to organize to block Katzman’s moves. This is because, in their view, it is a matter of trampling on the rights of the minority. Minority shareholders also include Moti Ben-Moshe – who owns 4.7% of Norstar, as well as directly in Gazit Globe shares, so that his total share value in the group’s companies is NIS 300 million – but as far as is known he is not part of the counter-move.