First objection to the merger of Delek Israel with Shufersal On the one hand, one of Shufersal’s major shareholders. Today sent a group The Phoenix A letter to Shufersal’s board of directors, calling for a postponement of the examination of the proposal, at least until Shufersal’s administrative backbone stabilizes, and until the permanent management can examine appropriate strategic alternatives.
Yesterday, Delek Israel shareholders submitted a proposal to merge the company into Shufersal. According to the proposal, Delek Israel shareholders will transfer all of their holdings in the company to Shufersal, in exchange for the allotment of Shufersal shares.
The conversion rate in the transaction will be calculated based on valuations performed for both companies by an external valuer. However, in the report to the stock exchange noted Blade L.R. (Which holds 40% ofDelek Israel), Because according to the data available to Delek Israel shareholders, they are entitled to a share allotment that will give them a 10% holding in Shufersal after the completion of the move (subject to adjustments such as the distribution of dividends).
In addition, the owners of Delek Israel will inject another NIS 100 million in cash into Shufersal, in exchange for an additional allotment of shares according to the value of the company determined in the transaction. Shufersal is currently traded on the stock exchange at a value of about NIS 7.5 billion, so that the cash flow will give Delek Israel owners another 1.2% -1.3% of Shufersal shares.
In addition, the transaction includes the granting of options to Delek Israel owners, options to increase their holding in Shufersal to a rate of up to 19.99% by way of an additional capital injection against the allotment of additional shares. The options will be exercisable for one year only, at an exercise price that reflects the aggregate value of Shufersal and Delek Israel, as determined in the valuation.
Delek Israel hoped that the institutions would support the proposal
Delek Israel is held by Lahav L.R. (40%), Uri Mansour (35%) andFuel group (25%). On the other hand, Shufersal is a company without a controlling interest, in which 60.4% of the shares are held by the six largest institutional entities in Israel.
Delek Israel shareholders hoped that the institutional bodies would support their proposal, but now it turns out that at least one body strongly opposes this. A letter sent today by the Phoenix Group to the Shufersal board of directors also states that “in recent months, the conduct of the company has caused us great concern and the seriousness of things is now sharpening.”
This sentence probably refers to a number of recent events at Shufersal, starting with the departure of veteran CEO Itzik Aberkhan over a dispute with chairman Yaki and Damani, through Shufersal’s decision to acquire control of the Mini Line company that operates the ALM electronics chain, In the decision of the board of directors to appoint Ofer Bloch, who does not have much experience in the field of retail, to the position of CEO.
“The deal does not reconcile with the core of the company’s strategy”
In today’s letter to Shufersal’s board members, the Phoenix Group emphasizes that in its position as a major shareholder, the examination of the merger proposal of Delek Israel owners should be postponed and should not be accepted. “The circumstances are very clear to you. The results of the company today do not reflect the potential inherent in it.
“The company has faced and is currently facing managerial challenges, with the company’s management being a temporary management, in fact. The company’s CEO has not yet taken office and about half of the company’s board members are expected to be appointed only in May.
“The deal is not one that is consistent with the core of the company’s strategy. Accepting the offer in these circumstances and according to the company’s results today is not a deal that will benefit the company and its shareholders.”
According to the Phoenix Group, these are strategic alternatives, which will be carried out at the right value for Shufersal and in accordance with the core of its strategy. The Phoenix, which owns about 9% of Shufersal’s shares, writes that “we will not be able to come to terms with harming the company and its shareholders and clearly state that we will insist on the benefit of any damage caused as a result.”
The Phoenix Group further emphasizes that “approving the proposal in the existing circumstances of the company means, unequivocally, harm to the good of the company and its shareholders. Manner, with the approval of a material transaction as set forth in the offer.
“Moreover, approving an offer at this time, not least if one considers its terms, necessarily raises serious questions and concerns, lest these are foreign considerations that steer the deal. This is an offer, which on the face of it is brought ‘to the table’ in a hurry.
“Its terms, including an allocation to Delek Israel at a rate of at most 19.99% of the company’s issued and paid-up share capital, are presumed to be sewn in this way, so that the transaction can ostensibly be approved only by the company’s board of directors. “Your duties as a member of the Board of Directors will be examined under these circumstances,” the Phoenix Group emphasizes to Shufersal’s directors.