Bayside control battle intensifies

Bayside office building in Herzliya  credit: Eyal Izhar
Bayside office building in Herzliya credit: Eyal Izhar

To thwart a takeover by Aaron Frenkel, Discount Investment seeks to appoint more directors and is mulling a purchase offer for shares.

The battle for control of income-producing real estate company Bayside Land Corp. Ltd.(Gav Yam) (TASE: BYSD1) between Discount Investment (through subsidiary Property and Building Ltd. (TASE: PTBL)) and Aaron Frenkel is intensifying. Property and Building, which holds 44.5% of Bayside (versus 32.7% held by Frenkel) informed investors yesterday that it was "examining the possibility of carrying out a special tender offer to purchase… in which the company will offer to buy ordinary shares of Bayside amounting to not less than 5% of its share capital"

The move comes in advance of an extraordinary shareholders meeting at the end of September that is due to decide on the appointment of three new directors of Bayside on behalf of Property and Building.

On the agenda at the meeting will be the appointment of Michael (Mikey) Salkind, Doron Cohen, and Baruch Itzhak as directors of Bayside. Salkind is currently a director of Property and Building and of its parent company Discount Investment; Doron Cohen is CEO of Property and Building and a director of the company, in addition to being CEO of Discount Investment; and Baruch Itzhak is CFO of Property and Building.

Despite its large holding in the company, Property and Building is not currently represented on Bayside's board of directors. At present, the board has six members, three regular directors and three external directors. The three regular directors are former Mizrahi Tefahot Bank (TASE:MZTF) CEO Eldad Fresher, who serves as chairperson of Bayside, Yuval Bronstein, and Ilan Gifman. Bronstein was formerly CEO of Israel's largest real estate company, Azrieli Group Ltd. (TASE: AZRG), while Gifman was CEO of income-producing real estate company Aspen Group Ltd. (TASE:ASGR). If the shareholders meeting approves the appointment of the three new directors, Bayside's board will grow to nine members.

Bayside is one of the largest office rental companies in Israel. It mainly develops, lets, and manages industrial parks for technology companies. It has a market cap of NIS 7.8 billion, after a 91% rise in its share price over the past year.

A year ago, Frenkel began investing in Bayside, with the aim of taking over the company, and since then has raised his holding several times. The collapse of Eduardo Elsztain's business in Israel, however, spoiled Frenkel's plan, when the buyers of the 82.26% controlling interest in Elsztain's holding company Discount Investment - a consortium headed by Zahi Nahmias's Mega Or Holdings (TASE: MGOR) and Elco Holdings Ltd. (TASE: ELCO), controlled by brothers Mikey and Danny Salkind - decided to bolster Discount Investment's control of Bayside.

Published by Globes, Israel business news - en.globes.co.il - on August 30, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Bayside office building in Herzliya  credit: Eyal Izhar
Bayside office building in Herzliya credit: Eyal Izhar
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