Trustees for the bonds of Discount Investment Corporation (TASE: DISI) yesterday decided to summon an urgent joint meeting for holders of the company's two long-term bonds series (F and J). At the meeting, scheduled for tomorrow, the bondholders will hear from the company's management, headed by controlling shareholder Eduardo Elsztain, a report on the state of the company and its business, and will then take advice about protecting their rights.
Discount Investment yesterday reported that its attempt to buy the public's holdings in its Property & Building subsidiary had failed. Discount Investment offered NIS 766 million for the 31.17% of Property and Building Ltd. (TASE: PTBL) shares held by investment institutions and private investors, but the offer to purchase did not receive the minimum response required in order to acquire all of the shares.
The offer failed because Psagot Investment House decided not to accept it, despite the premium on the market price it offered. Psagot owns 6.92% of Property & Building's shares, and was therefore able to thwart the offer to purchase by itself, because the entity making the offer to purchase needs at least 95% of the company being acquired to force the remaining shareholders opposing the offer to sell their shares.
Discount Investment says that shareholders holding an aggregate 22.65% of Property & Building's shares, amounting to 72% of the minority shareholders, accepted its offer. This was not enough, however, to acquire full ownership of Property & Building and delist it from the Tel Aviv Stock Exchange (TASE).
IDB Development spotted Psagot's opposition to the offer before the offer to purchase expired. Elsztain therefore visited Psagot in recent days in an attempt to persuade its investment managers of the advantages of selling, but was unsuccessful.
Following the failure of its offer to purchase, Discount Investments will have to find other ways of complying with the Promotion of Competition and Reduction of Concentration Law, which requires elimination of a layer in its ownership pyramid. The company has only until mid-December 2019 to accomplish this. In its reports, Property & Building stated that it was considering several possibilities, including acquiring the minority stake in subsidiary Bayside Land Corporation or merging with it, selling the Bayside Land shares to Discount Investment or to another company controlled by Elsztain, and a partial sales of shares in Bayside Land to the public, which will make it possible to classify Bayside Land as a company without a controlling shareholder.
Published by Globes, Israel business news - en.globes.co.il - on June 27, 2019
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