Azorim Properties has targeted Amot Investments Ltd., and does not intend to give up its 16.3% holding in the company, signed a contract in early May to buy from Gmul Investment Co. Ltd. (TASE: GMUL) for NIS 125 million. The deal was subject to the pension funds that own 63.7% of Amot not exercising their first refusal rights to Gmul's stake.
The pension funds have exercised their first refusal rights, are unilaterally eliminating large single shareholders, such as Azorim Properties, in order to create conditions for a fair contest, which would give the pension funds' member the maximum amount for their shares. The Mivtachim Pension Fund, Makefet pension fund, and Central Pension Fund of the Histadrut Workers old pension funds (established before January 1, 1995) last week published a tender for their aggregate stake, plus Gmul's 16.3% stake, in Amot. The pension funds claim that bids in the tender will reflect at a company value of NIS 818 million.
Azorim Properties is not hiding its disappointment. Azorim Properties CEO Amir Biran says the pension funds' purchase of Gmul's stake in Amot was illegal. "Income tax regulations forbid institutional entities from owning more than 20% of a single company, not to mention increasing their stakes."
Biran implied that the measure might cause Azorim Properties to stop investing in Israel. "We're a group whose capital mainly comes from foreign investors. It's a pity that pension funds are blocking this investment, which benefits Israel's economy."
Biran added, "It should be pointed out that the state appears to have a conflict of interests between its roles as regulator and owner of the old pension funds."
Amot is one of Israel's largest real estate companies, with over 90 properties in Israel and overseas, including Beit Amot Mishpat and the Rehovot Mall. The company's shareholders' equity was NIS 700 million in 2004.
Likely bidders for Amot include Gazit-Globe Ltd. (TASE:GLOB) subsidiary Gazit Globe Israel Ltd., IDB Holding Corp. Ltd. (TASE:IDBH) subsidiary Bayside Land Corp. Ltd. (Gav Yam) (TASE:BYSD1), and Azorim Properties.
Published by Globes [online], Israel business news - www.globes.co.il - on June 5, 2005