Israeli businessman Lev Leviev is seeking to delist shares in AFI Development plc (LSE:AFID) from the London Stock Exchange. After acquiring the controlling interest in AFI Development from Africa-Israel Investments Ltd. (TASE:AFIL) (which he controlled at the time) in September 2016, Leviev has now filed an offer to purchase the public's holdings in AFI Development for $110 million.
Leviev's offer reflects a value of $314 million for AFI Development, 40% more than the price that Leviev paid Africa Israel. AFI Development's situation has greatly improved since Leviev acquired control of it. Leviev currently holds 65% of the shares in AFI Development, which operates in the Moscow real estate market and holds AFIMALL City through a Cypriot subsidiary. The value represented by the price he paid Africa Israel for the controlling interest in AFI Development is almost 30% less than the value represented by what he is offering to pay the minority shareholders in AFI Development.
Leviev bought the controlling interest in AFI Development from Africa Israel at the insistence of the bondholders in Africa Israel. This was the first measure towards the long-delayed debt settlement for Africa Israel, which is now about to be completed with the transfer of control in Africa Israel to Lapidoth Capital, controlled by Jacob Luxenburg. For this reason, the controlling interest in AFI Development was sold to Leviev only after the court approved the sale.
Capital market doubts success of Leviev's offer
AFI Development has two types of shares: A and B. Leview is offering $0.30 a share for both types of shares. The price of B shares rose 8.5% to $0.31 on Friday in response to the announcement, and has now risen 29% in on week. The price of A shares remained unchanged at $0.27 on Friday, after having soared 17% in just over a week. According to the offer by the Cypriot subsidiary, the offer to purchase represented a 43% premium on the price of A shares and a 21% premium on the price of B shares when it was made to AFI Development's board of directors on September 23.
Capital market sources nevertheless expressed doubt today about the likelihood that Leviev would manage to buy the public's holdings at the price he offered. The reason is the wide gap between AFI Development's declared equity and the value reflected by the offer to purchase.
Published by Globes, Israel business news - en.globes.co.il - on October 27, 2019
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