Meitav Investment House Ltd. and B. Gaon Holdings Ltd. (TASE: GAON) subsidiaries Gaon Investment House Ltd. and Gaon Capital Markets Ltd. have signed an agreement to merge at the end of March. The merged investment house, which will be named Meitav, will have about NIS 14 billion in assets under management.
Under the terms of the agreement, Gaon Investment House will be absorbed into Meitav. Meitav will assume all of Gaon Investment House's assets, rights, and liabilities, including the provident, mutual, and exchange traded fund management companies, and its online trading unit Gaon Trade.
Gaon Holdings will own 30% of the merged investment house, and Meitav's owners, chairman Zvi Stepak and Shlomo Simanovsky, will own 70%.
The consolidated firm will assume both Gaon Investment House's NIS 20 million debt and Meitav's NIS 40 million in cash.
At the end of September 2008, Gaon Investment House has NIS 7.36 billion in assets under management, as follows: mutual funds - NIS 1.94 billion; provident and pension funds - NIS 873 million; portfolio management - NIS 1.69 billion; exchange traded funds - NIS 2.86 billion. Meitav has NIS 9.19 billion in assets under management, as follows: mutual funds - NIS 2.3 billion; provident and pension funds - NIS 2.96 million; portfolio management - NIS 3.72 billion; exchange traded funds - NIS 206 million.
Zvi Stepak said today, "We're pleased to complete this merger with Gaon Capital Markets, although it is still subject to formal approvals, which we hope will be completed quickly. The deal strengthens Meitav's standing in the Israeli capital market, especially in the challenging times we face, and it also improves the basket of products and services that Meitav Investment House offers its clients."
Gaon Investment House's real estate assets, a building in Ramat Gan, is not part of the deal. Meitav will not transfer its hedge fund and investment banking business to the consolidated firm. Meitav will also continue to operate its own risk management and employee options management activities, as well as Meitav College, which offers courses in capital markets.
The merger is not good news for the employees of the two investment houses. Meitav has 200 employees and Gaon Investment House has 100. The managers and employees of Gaon units that Meitav currently lacks - ETF management and brokerage services - will reportedly keep their jobs. However, not all managers and employees in redundant activities - mutual and provident fund management and portfolio management - will do so. The consolidated firm will reportedly shed about 100 employees.
Gaon Holdings chairman Moshe Gaon added, "This is a good deal for Gaon Holdings, which will give value to our shareholders and to the clients of the merged company in the present capital market climate, in which consolidation is desirable."
The merger comes after a failed three-way merger between the two investment houses and Prisma Investment House Ltd.
Published by Globes [online], Israel business news - www.globes-online.com - on March 11, 2009
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