Sources inform ''Globes'' that the National Union of Israeli Students is considering selling its 50.5% controlling interest in Issta Lines Ltd. (TASE: ISTA). Issta Lines’ market cap is NIS 151 million, and the Students Union will reportedly ask for a 40% premium.
Students Union chairman Assaf Segev said it was decided to examine selling control of Issta Lines because the union was a political body whose leaders are replaced every few years, and who have no skills in managing a company.
The National Union of Israeli Students plans to close the proceeds of a sale in a fund to be managed by a public body headed by a judge or university president. The proceeds will finance various student unions and provide millions of shekels a year in scholarships for needy students. Issta Lines currently distributes an annual pre-tax dividend of NIS 2.7 million to the Students Union, and the union believes that a fund will generate a much higher return.
The National Union of Israeli Students founded Issta Lines in 1956 as a non-profit association to provide low-cost tourism and flight services for students. ISSTA Lines was incorporated as a private company in 1989, becoming one of Israel’s largest travel agencies. The company went public in 1996 and began distributing dividends. In 1997, Knafaim-Arkia Holdings Ltd. (TASE:KNFM), controlled by the Borovich family, acquired 25% of the company, and became its business partner.
When Knafaim acquired the controlling interest in El Al Israel Airlines Ltd. (TASE: ELAL) in 2005, the Antitrust Authority ordered it to sell its holdings in Issta. Knafaim sold 13% of ISSTA Lines to Pi Glilot CEO Avi Dotan, and 13% to Issta Lines CEO Ahishai Gal. Ophir Tours Ltd. owns 6% of Issta Lines, and the public owns the rest.
Issta Lines is a retail travel agency and organizer of charter flights. The company sells flight tickets and tour packages for Israel and abroad, and provides ground services. The company has 51 branches in Israel and three overseas subsidiaries.
Issta Lines holds Flying Carpet Ltd., Nofesh Yashir Ltd., which specializes in low-cost tours; Histour - Eltiv Ltd. (known as American Express Travel and Tours), a chain of travel agencies for businesspeople; and online ventures Walla Tours and Last Call.
Yesterday, Issta Lines announced plans to boost sales from NIS 1.5 billion a year to NIS 2.5 billion within five years at an investment of NIS 315 million.
Published by Globes [online], Israel business news - www.globes.co.il - on February 13, 2006