Israel Phoenix Assurance and Hadar Insurance Holdings today announced that their merger would be delayed several months, after the discovery of a slight error in calculating the value of the deal. Sources inform "Globes" that a 0.3% error in the calculation of Hadar's value for the merger was discovered last night. The calculations must now be repeated.
The error was discovered in the office of Prof. Nissim Aranya, whose staff performed the calculations for the merger. The companies notified the Securities Authority at 10 PM, immediately after the error was discovered. Israel Phoenix and Hadar discussed with the Securities Authority the wording of their announcement and the explanation of the error to be given.
Israel Phoenix sources said today that while the error was slight, it required the repeating of complicated calculations and the reprinting of many documents linked to the deal. They said this was the reason that such a small error would cause such a long delay. At the same time, the sources said the error would not prevent the deal for Meir's acquisition of Israel Phoenix for $312 million from being sealed.
Israel Phoenix today asked the Tel Aviv District Court to reject Shlomo Eliahu's petition to convene a general meeting for Israel Phoenix shareholders in order to obtain a special majority for the merger with Hadar. The court ruled yesterday that its decision on the petition would be given at a later date.
In its response to the petition, which it submitted through Adv. Pinhas Rubin and Adv. Tali Gefen, Israel Phoenix said that Eliahu had extraneous motives for trying to achieve veto power over the merger. They alleged he was trying to pressure the Shachar-Kass group into buying his shares, after the group acquired the controlling interest from the Hackmey family. Eliahu owns 38% of Israel Phoenix.
According to Israel Phoenix, the merger is not an ordinary one, in which one company is absorbed by the other, but a split and merger. The Israel Phoenix board is autonomous and sovereign, and therefore exempt from interference from a general shareholders’ meeting, due to the division of authority between the various entities.
Israel Phoenix asserted that the split and merger were for the good of the companies, and the measure would benefit and strengthen them. Professional opinions did not confirm Eliahu's claim that a discount in the value of the holding company would be created.
Published by Israel's Business Arena on February 28, 2002