Israeli shopping malls and offices giant Azrieli Group (TASE: AZRG) has made a non-binding offer to acquire control of real estate company ZMH Hammerman (TASE: ZMH) at a valuation of NIS 635 million, representing a premium of 5.7% on the company’s market cap (NIS 600 million). This follows the completion of the acquisition by Melisron (TASE: MLSR) of real estate developer Aviv Real Estate Development and Management Ltd. from Aviv & Co. Real Estate Group 1963 Ltd. last week.
Azrieli Group is proposing a reverse triangular merger whereby Azrieli Group, which is controlled by the Azrieli family, will buy all of the holdings of the public and financial institutions in ZMH Hammerman (56.7%) and thus acquire control of the company. The controlling shareholders in the company (the family of Haim Feiglin and the Ben-Avraham family), who hold 45.3% of its shares, will be able to sell 10% to Azrieli Group, which means that Azrieli Group will own two-thirds of ZMH Hammerman at most. Azrieli Group also states that chairperson Ran Ben-Avraham and CEO Haim Feiglin will remain as managers of the company and as shareholders.
The offer is subject to a due diligence examination, negotiations, the signing of a binding merger agreement, and obtaining approval from the Competition Authority and from ZMH Hammerman’s bondholders. ZMH Hammerman has listed bonds amounting to NIS 326 million, and these are expected to continue to be traded after the merger.
Underperfomance
Negotiations on the deal come against a background of substantial underperformance by ZMH Hammerman shares this year. Its share price has risen by 10.2%, while the Tel Aviv Construction Index has risen by 26%.
ZMH Hammerman builds mainly in Tel Aviv, Lod, Ramat Hasharon, Ramat Gan, Nahariya, Haifa, Netanya, Hadera, and Karmiel. It has more than 6,000 housing units in the planning and construction stages, and specializes in mixed use: residential together with offices and commercial space.
Azrieli Group chairperson Danna Azrieli said, "We have been examining the possibility of entering the residential real estate business in Israel for a long time. As Israel’s largest real estate group, we are committed, particularly at this time, to continue building the country and initiating projects in the areas of the group’s activity, out of faith in the Israeli economy and the State of Israel."
Haim Feiglin said, "The Azrieli Group’s decision to enter into residential activity represents an expression of confidence in the strength of the Israeli economy and in Israel’s residential real estate market. Subject to completion of the move, we, the current controlling shareholders, will continue to lead and advance the company as managers and as partners with Azrieli Group in the coming years."
Published by Globes, Israel business news - en.globes.co.il - on November 3, 2024.
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