Migdal puts Ramat Aviv Mall stake up for sale

Ramat Aviv Mall

Melisron owns 73.4% of Ramat Aviv Mall, and Migdal 26.6%.

Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), controlled by Shlomo Eliahu, has begun the process of selling its holdings in the Ramat Aviv Mall. Migdal, whose investments are managed by Asaf Shoham, published an "invitation for bids to buy shares in the Ramat Aviv Mall company." Migdal made it clear that the bid can apply to "all or part" of its holdings in the mall. Migdal plans to open an information room, and is requiring potential bidders to deposit a NIS 10 million guarantee.

Ramat Aviv Mall is a private company controlled by Melisron Ltd. (TASE: MLSR) with a 73.4% stake, while Migdal owns 26.6%. The mall company includes both the commercial space in the mall and the office tower above it.

In its 2018 report, published six months ago, Migdal revealed that the provisions of the Promotion of Competition and Reduction of Concentration Law were likely to require the insurance company to sell 16.6% of its shares in Ramat Aviv Mall. The law lists a number of requirements that must be met by December 2019, headed by separation between holdings in major financial concerns from holdings in major non-financial concerns. A major financial concern will not be allowed to hold over 10% of a major non-financial concern. Migdal is classed as a major financial concern.

In this context, Migdal's 2018 reports state, "Given the fact that the mall company is a major non-financial company, as defined in the Promotion of Competition and Reduction of Concentration Law, the company classified NIS 206 million (rights to 16.6% of the mall's capital) as a held asset for sale, which will be measured, starting on this date, as the lower of its book value and its fair value, minus sale costs. Starting on this date, the company will not recognize its shares in the mall company's profits in respect of the proportion held for sale."

Despite the fashion market crisis, the collapse fashion chains last year, and the ongoing decline in shopping mall sales, Ramat Aviv Mall is believed to be one of Israel's most desirable and successful malls, with a series of flagship stores. According to Melisron's reports, the mall's occupancy rate was 100% as of the end of the second quarter of this year.

According to Migdal's reports, Ramat Aviv Mall finished 2018 with an NIS 86.2 million net profit, compared with NIS 134.8 million in 2017. The mall's value in Migdal's reports is NIS 1.24 billion.

The 2018 reports of the Melisron group, which acquired control of the company that holds the mall in 2009 at a NIS 1.53 billion value, show that it assigned the mall a NIS 2.41 billion value as of the end of 2018, double its value in Migdal's reports, and a NIS 2.51 billion value as of the end of the second quarter this year.

Migdal is not the only insurance group affected by the Promotion of Competition and Reduction of Concentration Law; the same law is forcing Delek Group to sell Phoenix. Delek has already signed an agreement to sell its holdings in the insurance group, in which it is the controlling shareholder, to foreign funds Centerbridge Partners and Gallatin Point Capital. It is believed that the regulator whose approval is necessary for the deal, Capital Markets, Insurance, and Savings Authority supervisor Moshe Bareket, will approve the huge deal in the coming days.

The Zur Shamir Holdings group, controlled by the Schneidman family, completed the process of delisting Direct Insurance from the Tel Aviv Stock Exchange in order to eliminate a level in the group's publicly held pyramid.

Clal Insurance cannot part of the group of companies controlled by Eduardo Elsztain, which owns it through IDB Development. For its own exceptional and special reasons, however, Clal Insurance has been under the effective control of a trustee appointed by the Capital Markets, Insurance, and Savings Authority supervisor since August 2013. The trustee has been periodically selling IDB Development's holdings in Clal Insurance. Elsztain himself recent sold a large proportion of his holdings in the company to several well-known buyers.

Published by Globes, Israel business news - en.globes.co.il - on October 24, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Ramat Aviv Mall
Ramat Aviv Mall
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