A few months after real estate developer Gil Blutrich induced Canadian billionaire Alex Shnaider to invest in Mishorim Development Ltd. (TASE:MSHR), which Blutrich controls, and in which he serves as company president responsible for business development in Israel and overseas, the pair are now considering a sale of some of Blutrich's shares to Shnaider that will make the two men equal partners in the company's controlling interest. Blutrich currently owns 53% of Mishorim and Shnaider 21%; after the deal, each of the two will own 37%.
As part of a roadshow for a bond issue by subsidiary Skyline International Development Inc. (TASE: SKLN) (which recently successfully raised nearly NIS 130 million), Mishorim late last month announced, following inquiries by institutional entities, that Blutrich was in initial negotiations with Shnaider for a joint control agreement in the company through a sale by Blutrich of company shares to Shnaider. "Blutrich will retain the power to appoint most of the company board of directors, and to be involved with day-to-day management of the Skyline subsidiary until at least September 2017, the company stated."
Shnaider acquired his current holding in Mishorim in later 2015 with a NIS 40 million investment in a private placement of 21% of the company's capital, reflected a company value of NIS 185 million, after money, at a NIS 6 share price, 36% higher than the market price at the time. Shnaider's entry gave the share a boost, with the share rising 40% this year; its current market cap is NIS 220 million.
The current deal by the duo is at a NIS 9.50 share price, 32% higher than the current market price, meaning that Blutrich will make up to NIS 45 million on the sales of shares to Shnaider. Mishorim said, "There is no guarantee that the negotiations will produce a binding agreement… There is no guarantee that the terms are final."
"An added attraction for the portfolio"
Most of Mishorim's business is conducted through Skyline, in which Mishorim currently holds a 50% stake. Upon investing in the company, Shnaider said, "We have been following for some time the business of Mishorim and its subsidiary, Skyline, in Canada and the US. We found it to be an attractive addition to our investment portfolio. We believe in the company management, its properties, and its business strategy, and that it has potential value for shareholders, because of both projects likely to materialize in the near future and the process of improvement taking place in some of the company's properties.
"We also believe that because of the complexity of Skyline's projects in Canada, the company is undervalued by the capital market, and we regard the current transaction as an excellent opportunity to invest in these projects at a price comfortable to us."
Skyline began operating in the Canadian real estate market in 1998, where it owns and operates hotels, develops residential and commercial real estate on hotel and vacation sites, and owns income-producing real estate. The company currently owns four vacation sites in Ontario Province, together with land reserves for development.
The company also has real estate business in the US, and the value of its properties currently stands at NIS 1.1 billion. The company market cap is NIS 480 million, after rising nearly 30% this year.
Parent company Mishorim, founded by Blutrich in 1990, held its IPO on the Tel Aviv Stock Exchange (TASE) in 2007. Mishorim also owns 10 income-producing properties in Israel, mainly offices, and also jointly owns eight income-producing properties, mainly commercial space, and an apartment complex in the US jointly with partners.
Transferred his holding in Maccabi Tel Aviv
Blutrich, 51, began as a real estate agent in Ra'anana, then switched to development, first in the Sharon area, and later in the US. A visit to Toronto nearly 20 years ago made him a permanent resident there. Shnaider and Blutrich have been doing business together since 2010, when Mishorim, together with several partners, one of whom was Shnaider, bought the King Edward Hotel in Toronto for 48 million Canadian dollars.
Shnaider, 47, is one of the founders of the Midland Group holding company, which deals in steel, agriculture, real estate, ship building, and industrial production. His family immigrated to Israel when he was a child, before moving to Toronto, where he lives to this day. He was formerly included by "Forbes" on its list of billionaires with wealth amounting to $1.3-1.6 billion, but did not appear on the 2015 list.
Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016