Shikun & Binui Holdings Ltd. (TASE: SKBN), controlled by businessperson Naty Saidoff, is negotiating to sell its entire 37.5% holding in the ADO Group (TASE: ADO) to a number of buyers at a premium on the market price, the company reported today to the Tel Aviv Stock Exchange (TASE).
The negotiations are apparently with Shikun & Binui's partners in the controlling interest: foreign investment fund Apollo Global Management, which holds 22% of ADO's capital, and the Dayan family, which owns 19.7%. Other concerns may also be involved.
ADO Group operates in the Berlin residential real estate market through its 38% holding in ADO Properties, a company listed on the XETRA stock exchange. The price of Shikun & Binui's holdings in the deal being negotiated is apparently NIS 800-900 million, compared with a current market value of NIS 750 million.
ADO Properties benefited from the boom in Berlin income-producing residential real estate in recent years. Its portfolio includes 23,000 apartments in the city, in addition to 1,000 stores.
Shikun & Binui's negotiations are the result of an inability to reach understandings with Apollo and the Dayan family on management questions concerning ADO Properties, coupled with many difficulties in Shikun & Binui's other business in Israel and overseas and an increase in its debt.
Shikun & Binui reported a NIS 1.5 million net loss in the third quarter, compared with a NIS 51.6 million profit in the corresponding quarter last year. Revenue was unchanged at NIS 1.5 billion, but gross profit was down 38% to NIS 230 million, with a steep rise in financing expenses and tax payments putting the company into the red. A number of one-time events at Solel Boneh International (SBI) cost Shikun & Binui NIS 37 million in losses, mainly on one-time provisions for projects in Uganda, Colombia, and other countries, in addition to further deprecation in the naira, Nigeria's currency, which cost Shikun & Binui NIS 5.5 million.
Shikun & Binui's revenue fell 14% to NIS 4.2 billion in the first nine months of 2018, while its gross profit was down 2.2% to NIS 555 million. Its net profit in this period reached NIS 184.7 million, 59% more than in the corresponding period last year, following a large one-time profit on the sale of its holdings in Carmelton Group (Carmel Tunnels) and Northern Routes Engineers.
Saidoff acquired a 46.9% controlling interest in Shikun & Binui from Shari Arison in July for NIS 1.1 billion. Since the deal, Shikun & Binui's shares price has risen slightly, pushing its market cap up to NIS 2.7 billion.
Two months ago, businessperson Yaakov Luxembourg, the controlling shareholder in Lapidoth, made a NIS 50 million profit on the sale of his entire 7.3% holding in ADP Group to Apollo. He bought most of this stake a little over a year ago through Lapidoth Capital (TASE: LAPD), the Lapidoth Heletz oil and gas exploration partnership, and privately.
Luxembourg bought most of his ADO Group shares in September 2017, shortly after the Dayan family and Apollo surprised Shikun & Binui by acquired 33.5% of the company from investment institutions. The canny financier spotted an opportunity to wedge himself between the two concerns by establishing himself as the deciding factor in the company, and eventually made a big profit on the deal.
Published by Globes, Israel business news - en.globes.co.il - on December 20, 2018
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