El Al - Israir merger signed


The deal is subject to approval by the Israel Antitrust Authority director general.

The merger of Israir Airlines and Tourism Ltd. into El Al Israel Airlines Ltd. (TASE: ELAL) charter flight subsidiary Sun d'Or is slated was signed today. Sources inform "Globes" that after many months of negotiations, the parties met today to sign the merger agreement. The deal, however, requires several approvals, notably from the Israel Antitrust Authority director general. The parties were not available for comment.

In February, IDB Development Corporation Ltd. (TASE:IDBD), which fully owns Israir (through its IDB Tourism subsidiary) reported that it was in advanced negotiations with El Al for a deal. In the framework of the deal, IDB Development will sell 100% of Israir, and receive $45 million in cash and 25% of Sun d'Or.

As part of the deal, El Al will receive a call option to buy IDB Development's shares in Sun d'Or at a price and on terms yet to be determined, while at the same time IDB Development will receive a put option to sell the shares to El Al. A shareholders' agreement will be signed by El Al and IDB, under which the two companies will be reimbursed by Sun d'Or for various services each will grant the merged company.

Under the deal, Israir is expected to sell the airplanes it owns and sign an agreement to lease them. The $70 million from the sale of the planes will be used to repay a $35 million loan to Bank Leumi (TASE: LUMI). The rest of the proceeds from the sale of the planes will provide most of the cash payment that IDB Development is to receive from the sale of Israir. In its first quarter financial statements, IDB Development estimated that it would receive $154 million in 2018 as a result of the merger's completion.

Israir is led by CEO Uri Sirkis, who turned the company around and made it a profitable business after years of losses. The company currently has two divisions. The most important division is flights and overseas tourism, while the other includes incoming tourism, which was part of the Diesenhaus travel agency until last year. The income tourism division organizes trips in Israel for overseas tourist groups.

Published by Globes [online], Israel Business News - www.globes-online.com - on July 2, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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