Israeli real estate and aviation entrepreneur Aaron Frenkel has bought a 13.3% stake in Israeli drone manufacturer Aeronautics Ltd. (TASE:ARCS) including the 5.5% stake sold by The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5). Frenkel paid NIS 55-60 million for the shares.
At the same time the Israel Securities Authorities has issued a gag order on details of a probe being carried out by its Investigations, Intelligence and Trading Control Department.
The Phoenix sold its 5.5% stake at NIS 8.50 per share, 25% higher than Thursday's closing price. The deal totaled NIS 25 million.
Aeronautics develops and manufactures drones (unmanned aerial vehicles), surveillance balloons, payloads and advanced navigation systems and is controlled by the KCPS, Bereshit, and Viola funds. In addition, Menorah Mivtachim Holdings Ltd. (TASE: MORA) has a 9.4% stake in the company, Bank Leumi (TASE: LUMI) 5.3% and institutional investors also have major stakes.
Frenkel was born to an orthodox family in Bnei Brak and is the youngest of three siblings. He made most of his money representing Boeing and Airbus in Central and Eastern Europe and owns the Lloyds Group of Companies, which has real estate, civil aviation, high-tech and energy investments. In recent years, Frenkel has focused on real estate in Europe, especially in the UK.
It would seem that Frenkel has identified an attractive investment opportunity in Aeronautics at its current price. Market sources do not believe that Frenkel plans to raise his stake and seek control of the company.
Aeronautics held its IPO in the summer of 2017 after the funds controlling the drone manufacturer made a huge offer to purchase worth over NIS 400 million. At the same time the company issued new shares worth NIS 53 million through lead underwriter Leumi Partners and Aeronautics began trading on the TASE with a market cap of over NIS 500 million. Since the IPO, the share price has fallen by more than 50% and its market cap has shrunk to NIS 460 million today.
Aeronautics was badly hit by an affair in a foreign country, which saw Israel's Ministry of Defense suspend its marketing and export license for UAVs (there is still a gag order on this affair after criminal proceedings were instituted).
Four months ago, Aeronautics notified the TASE that 10 senior executives including CEO Amos Matan will stand trial on the matter subject to a hearing by the State Attorney's economics department. The charge sheet includes receiving bribes in aggravated circumstances and violations of the law controlling defense exports.
In August, Aeronautics board rejected a NIS 430 million bid to buy it by Rafael Advanced Defense Systems Ltd. and businessman Avichai Stolero.
Correction: "Globes" reported earlier today that the buyer of Phoenix's holding in Aeronautics was Embraer. This report was entirely erroneous.
Published by Globes, Israel business news - en.globes.co.il - on December 31, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018