2018 ended two weeks ago, and the Tel Aviv Stock Exchange (TASE) is still not a public company. This is not a new state of affairs, but it appeared last summer that 2019 would usher in a new era, with the TASE's own shares being listed on it in accordance with the declarations by CEO Ittai Ben-Zeev, following the sale of most of the shares to foreign investors.
Things, however, did not go according to plan. The TASE employees, who own 6% of the shares, announced that they were demanding more money in exchange for their consent to the offering. Several months after the historic deal for selling a majority of the shares in Israel's only stock exchange to foreign investment concerns, a public offering for the TASE's shares is in the deep freeze. As of now, it looks as though the workers and management are locked in conflict over the price demanded by the workers, which management is refusing to pay.
While the parties are waiting for some kind of decision by the labor court, the status quo between the foreign and veteran shareholders in the TASE remains unchanged. As far as is known, the TASE is giving Ben-Zeev full backing in his conflict with the workers. If the situation does not change, only in January 2020 will a large proportion of the shares in the TASE be put up for sale by the foreign concerns who bought them (if no offering is held by then).
Approval of the offering by the TASE board of directors has also not been finally completed. Before an offering of shares takes place, a general meeting of the TASE's shareholders will be needed in order to approve the new board of directors.
The law states that a committee headed by a judge must be formed (it began operating in late December). The committee must publish at least two names of candidates for each position, in addition to a director representing foreign investment fund Manikay Partners, which became the largest shareholders in the TASE. The committee is similar to the one for banks. Completion of the committee's work depends on the chairperson, Judge (ret.) Danya Kareth Meyer. This question will not pose a problem, and the work will probably be completed in the foreseeable future.
No dialogue between the parties
In late August 2018, a group of five foreign funds, led by Manikay, an Australian-US fund, acquired 71.7% of the shares in the TASE, mainly from the banking TASE members. The purchasers plan to offer at least 31.7% of the TASE's shares to the public. The deal for transferring the controlling interest in the TASE was made possible when the Knesset enacted a law authorizing a change in the TASE's ownership structure, thereby paving the way for final relinquishing of the shares by the TASE members, most of whom were banks.
The current leading shareholders in the TASE, which have permits for holding the shares, but not for exercising control of it, are Manikay with 19.9% of the shares, which has the right to appoint one director, followed by foreign funds Dalton, Moelis, Sunsuper, and Danish fund Novo Nordisk Foundation, which is based on the Novo Nordisk drug company. Other than Manikay, the foreign funds have no representation on the TASE board of directors; they are silent investors in the TASE. Employees of the TASE hold 6% of its shares.
The shares slated for sale to the public are most of the shares held by the four foreign funds with no representatives on the board of directors. Each of these funds directly owns 4.7% of the TASE's shares, plus another 8.2% that each one transferred to trustee Moshe Tery (altogether 32.9% of the shares in the stock exchange), who will hold them until a future offering.
In the future, each of these four funds will offer at least 7.9% of the shares, leaving it with at most 4.99%. The veteran shareholders in the TASE still hold 22.3% of the TASE's shares, which they received in exchange for their consent to the change in the TASE's ownership structure.
Less than two years ago, following two years of negotiations, the TASE workers and management reached a collective five-year agreement ending in 2021, in which the workers received their shares in the TASE. This is not preventing the workers, who are among Israel's highest-paid employees, with an average cost of NIS 50,000 per month, from demanding a 10-year immunity from layoffs, starting on the date of an offering, plus a bonus of five months' salary for each of the unionized workers.
As of now, there is no new date for an offering of TASE shares to the public; the dispute between the workers and management has reached a deadlock, and is being heard in a labor court. Ben-Zeev asserts that the workers are not entitled to declare a labor dispute over additional payment for the offering, while the workers are digging in for a struggle. The labor court has not yet intervened in favor of either party; it sent the parties to talks, which have yet to take place.
Published by Globes, Israel business news - en.globes.co.il - on January 14, 2019
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