Chaim Katzman is taking action to stifle a control battle at Norstar (TASE: NSTR). The holding company, through which Katzman controls income-producing real estate company Gazit Globe (TASE: GZT), reported today that it would distribute a dividend in kind of 23.2 million Gazit Globe shares. The move, if it is completed, will reduce the control pyramid in Gazit Globe.
Norstar states that the shares represent 14% of Gazit Globe, fully diluted. After the transaction is completed, Norstar will hold only 37% of Gazit Globe. At the same time, Norstar will make a NIS 166 million rights issue to its shareholders.
Norstar will offer shares at NIS 40 each, which represents a discount of 13% on the average price of the share over the past 30 trading days. For each share held in Norstar, shareholders will be able to buy 0.12 shares. The shares in the rights issue will be entitled to the dividend in kind.
Two months ago, Israel Canada (TASE: ISCN), controlled by Asaf Touchmair and Barak Rosen, sprung a surprise when it announced that it had reached a 10% holding in the voting rights of Norstar. Katzman realized that the pair was planning to negotiate with other shareholders with the aim of mounting a takeover bid for Norstar, and he swiftly invited Touchmair and Rosen to a meeting. The meeting concluded with a non-aggression pact, giving Israel Canada a further tranche of Norstar shares and material influence on the running of the company. The agreement stipulated that Israel Canada would buy further shares in Gazit Globe form Katzman at a premium over the market price, but would refrain from increasing its holding on the company after that. Israel Canada currently holds 21.7% of the share in Norstar and the voting rights, while Katzman holds 28% of the voting rights. Rami Levy recently reached a 5% holding in the company.
In its explanation of the move it announced today, the Norstar board states, "The distribution of Gazit Globe shares to the company's shareholders will bring them closer to the underlying asset while reducing the inherent risk of holding shares in a leveraged holding company. In addition, by holding Gazit Globe shares, the shareholders will be liberated from the discount usually characteristic of the share price of a holding company."
The board further states that the Law for Promotion of Competition and Reduction of Concentration has created a situation in which a public company controlled by another public company is subject to substantial restrictions on its activity that harm its value and hence also the value of the parent company's shares, and that the company is therefore taking preparatory action that, when the time comes, if it sees fit (and subject to financial and other conditions), will enable it to renounce control of Gazit Globe.
"A distribution in kind of shares of Gazit Globe to shareholders of the company will increase the float of Gazit Globe shares, leading to greater liquidity, and ultimately improving the correlation between Gazit Globe's economic value and its market value," the company's notice states.
This move follows another recently carried out by Gazit Globe when it bought out the minority holdings in its subsidiary Atrium, which holds the group's income-producing real estate activity in Europe. Gazit Globe now holds just one public company, Citycon, which is active in Scandinavia.
Katzman is CEO and deputy chairperson of Norstar and of Gazit Globe. Norstar's chairperson is Moshe Ronen, and Gazit Globe's chairperson is Ehud Arnon.
Before the announcement, Gazit Globe had a market cap of NIS 5 billion, and Norstar had a market cap of NIS 2 billion.
Yesterday, Gazit Globe announced that, subject to shareholder approval, it would change its name to G City. It also released news of two large projects, one in Florida and one in Finland.
In Tampa Bay, Florida, in conjunction with American Land Ventures, the company will construct a project consisting of 334 rental housing units at an investment of $175 million, bringing its rental housing assets in Florida to 1,100 units, valued at $740 million, and at an investment of $510 million.
In Finnish capital Helsinki, subsidiary Citycon has opened the Lippulaiva shopping center, valued at €430 million, and with 44,000 square meters of space above a new metro station.
Published by Globes, Israel business news - en.globes.co.il - on April 11, 2022.
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