IKEA gets green light for Beersheva branch

IKEA Kiryat Ata

The Bronfman-Fisher group bought land in Beersheva for NIS 42 million after protracted court proceedings.

Following a prolonged legal dispute that has now been concluded, the road is open for the construction of an IKEA branch in Beersheva. The Bronfman-Fisher group, which owns the IKEA franchise for Israel, won a pricing procedure for the purchase of 73 dunam (18.25 acres) of land in Beersheva at NIS 580,000 per dunam (NIS 2.32 million per acre). The group plans to build another branch of the Swedish furniture chain on the site.

Beersheva will be IKEA's fourth Israeli store after the existing branches in Netanya, Rishon Lezion and Kiryat Ata.

The purchase became possible when the Supreme Court upheld the Beersheva District Court's cancelation of the sale of the land to a different company. The purchase of the land was no easy matter: in 2004, Meytavit Cible, the original owner of the land, came under pressure due to its debts to Bank Hapoalim (TASE: POLI) and Israel Discount Bank (TASE: DSCT). Adv. Doron Amir and Adv. Aharon Ben-Shahar were appointed receivers for the company on behalf of the banks (Ben-Shahar was replaced by Adv. Rafi Shaham in 2015). Over the years, the receivers sold various assets owned by Meytavit Cible, whose main asset was land in the Emek Sara industrial zone in Beersheva. For years, however, demand for the land was poor, and it could not be sold, being appraised at only NIS 365,000 per dunam (NIS 1.46 million per acre).

In December 2015, the Beersheva District Court ordered the sale of the land to go ahead. In January 2016, the Bronfman-Fisher group bid NIS 390,000 per dunam (NIS 1.56 million per acre). The group made it clear in its bid that if other bids were made, it would be willing to participate in a pricing procedure. The following day, after being contacted by the receivers, Blue Sky bid NIS 410,000 per dunam (NIS 1.64 million per acre) for the land. Instead of conducting a pricing procedure between the two bidders in order to maximize the proceeds for the land, the receivers asked the Court to approve Blue Sky's bid, which was duly approved by the District Court.

Stunned to hear of the approval of the sale of the land to Blue Sky, the Bronfman-Fisher group filed a request for cancellation of the sale through Advocates Avraham Aberman and Haya Spiegel from the Ephraim Abramson & Co. law firm. The request argued that the group had made it clear to the receivers that its bid was only initial, and that if a counter-bid were made, it intended to complete and raise its bid to NIS 450,000 per dunam (NIS 1.8 million per acre). It was further argued that although its bid had been the sole bid until Blue Sky made its bid, the receivers had nevertheless rushed to approve the new bid without any pricing procedure between the bidders.

The Beersheva District Court, which had originally approved the sale of the land to Blue Sky, granted the Bronfman-Fisher group's request for cancelation of the sale, stating that the receivers had acted with unreasonable haste in approving the sale to Blue Sky, particularly after the land had remained unsold for 12 years. Had the receivers reported to the District Court the Bronfman-Fisher group's intention of improving its bid in a pricing procedure, the Court would not have approved the sale. Blue Sky appealed the District Court's decision to the Supreme Court last February, arguing that it had acted according to the receivers' instructions, and that calling off the sale would cause it NIS 5-10 million in damages resulting from the need to find an alternative property.

The receivers also appealed the District Court's ruling. In early August, the Supreme Court accepted the Bronfman-Fisher group's argument and dismissed the Blue Sky appeal. Its ruling stated, "There were a number of defects in the sale procedure the receivers did not establish a clear and transparent outline for selling the land, gave Blue Sky preference over Bronfman-Fisher, and allowed the former to submit a counter-bid to that of the latter without giving the same opportunity to Bronfman-Fisher. Nor did the receivers state in their original request for approval that Bronfman-Fisher had asked for a pricing procedure."

The Supreme Court ordered that a pricing procedure be held between the bidders, which Bronfman-Fisher eventually won with its bid of NIS 580,000 per dunam (NIS 2.32 million per acre), amounting to NIS 42.3 million for the 73 dunam (18.25 acres), not including VAT. Bronfman-Fisher will apply for a building permit for an IKEA branch on the land.

Published by Globes [online], Israel business news - www.globes-online.com - on August 16, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

IKEA Kiryat Ata
IKEA Kiryat Ata
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