Alony Hetz Property and Investments Ltd. (TASE: ALHE), controlled by director and president Nathan Hetz, this morning acquired 80% of Amont Investments Ltd. from six old pension funds (established before January 1, 1995) for NIS 765 million. The price reflects a company value of NIS 956 million for Amot. Alony Hetz topped Delek Real Estate Ltd.’s (TASE:DLKR) offer of NIS 700 million.
Six pension funds, headed by Mivtachim Pension Fund, Makefet Pension Fund, and Central Pension Fund of the Histadrut Workers, founded Amot in 1964. They 63.7% of Amot until recently. They acquired Gmul Investment Co. Ltd.’s (TASE: GMUL) 16.3% of the company a month ago by exercising their first refusal rights. Because income tax regulations forbid pension funds from owning more than 20% of a single company, the pension funds’ purchase of Gmul’s stake in Amot was conditional on the funds offering their entire aggregate stake in the company for sale.
The minimum company value for Amot set in the tender was NIS 818 million, on the basis of the price that Azorim Properties Ltd. offered Gmul for its stake in the company.
Central Pension Fund of the Histadrut Workers special manager Shalom Singer said the acquisition of Gmul’s stake in Amot was intended to remove strong competitors enjoying an advantage, such as Azorim Properties. He said the acquisition created fair competition, which would give the funds’ members maximum value for their shares.
The old pension funds sold their holdings in Amot because it was not worthwhile to own the controlling interest in the company. As controlling shareholders, they were liable to paying taxes on income and dividends, whereas as investors in income-producing properties, they are tax-exempt.
Bank Hapoalim (LSE:BKHD; TASE:POLI) owns the other 20% of Amot. The old pension funds’ sale of their holdings in Amot was subject to Bank Hapoalim’s right to participate in the sale. If Bank Hapoalim exercises this right, Alony Hetz will have to buy the bank’s stake within seven days, at the same terms as in the transaction with the pension funds.
Amot is one of Israel’s largest real estate companies. In the backdrop to the sale is the collapse of Clubmarket Marketing Chains Ltd., which accounts for 2.5% of Amot’s revenue.
Published by Globes [online], Israel business news - www.globes.co.il - on July 26, 2005