Electra Consumer Products (TASE: ELEK) is considering a distribution of shares in Golan Telecom as a dividend in kind to its shareholders, followed by an offering of shares in the mobile phone company on the stock exchange, the company reported to the Tel Aviv Stock Exchange (TASE) simultaneously with the publication of its first quarter financial reports.
Electra Consumer stated, "The preliminary decision by the company's board of directors is designed to enable the company's management and that of Golan Telecom to assess the viability and feasibility of the measure, after which they will bring their recommendations to the relevant boards of directors."
Electra Consumer today reported that it was considering and assessing the measure, but its appears that the direction is clear and the spinoff necessary, indicating Electra Consumer's wish to generate new and independent activity around Golan Telecom, which makes the spinoff logical.
Golan Telecom is part of Electra Consumer, but in effect is managed completely independently; the synergy between the two companies is very limited. For example, sales of end-user equipment are not conducted at Golan Telecom; they take place as Machsanei Hashmal (Electrical Warehouses), Electra Consumer's marketing arm. A spinoff will make it possible to assess more accurately how the mobile phone arm should work and what it should and should not be responsible for.
Electra Consumer added, "This measure is complicated; it includes, among other things, a distribution in kind of Golan Telecom shares to the company's shareholders, preparation and publication of a prospectus for Golan Telecom after obtaining permission from the TASE and a permit from the Israel Securities Authority, and obtaining a pre-ruling from the Israel Tax Authority and/or complying with the provisions of the Income Tax Ordinance applying to a spinoff and other conditions."
Commenting on the matter, Electra Consumer CEO Zeev Kalimi said, "This measure is designed to enhance the business and managerial focus in each of the companies. In my opinion, it is likely to increase value of the shareholders, whose long-term benefit is our primary concern. We are currently considering all of the aspects of this measure."