On the same day that Bank Hapoalim (TASE: POLI) reported that Shari Arison, its controlling shareholder, was selling 49% of her holdings in the bank to a group of US investors, an important step by Arison's real estate and infrastructure arm in Israel - Shikun & Binui Holdings Ltd. (TASE: SKBN) - was agreed. Shikun & Binui announced that it had signed a joint management agreement with Apollo Global Management and the Dayan family in ADO Group Ltd. (TASE: ADO), following two weeks of negotiations. The negotiations were preceded by what appeared to be the beginning of a struggle for control of ADO.
ADO operates in the residential rental market in Berlin through a 38% holding in ADO Properties, listed on the Frankfurt Stock Exchange at a market cap of €1.8 billion (NIS 7.7 billion). Under the joint management agreement, Shikun & Binui will retain control of the ADO board of directors, but the ADO Properties board of directors will be controlled jointly, with each of the parties appointing three directors (three more directors will be independent). The parties agreed to take measures to increase trading in ADO Properties' shares, either by selling shares held by the ADO Group or by issuing new shares.
ADO share price surged 50% since early July
The result is a success for Apollo Global and the Dayan family, who began buying ADO shares last month, shortly after Shikun & Binui published an offer to purchase for 10% of the shares in ADO Group (which meant that it could not buy ADO Group shares on the market in order to prevent a takeover). Their purchases gave Apollo Global and the Dayan family an aggregate 37% holding in ADO Group, compared with Shikun & Binui's 40% holding.
ADO Group's market cap is NIS 1.9 billion, following a 50% surge in the share price since early July. It was learned today that veteran financier Jacob Luxenburg had taken advantage of the composition of ADO Group's shareholders. Investment company Lapidoth Israel Oil Prospectors Corporation Ltd. (TASE: LAPD), controlled by Luxenburg, today announced that it had become a party at interest in ADO Group with a 5.1% holding. Luxenburg made the purchases through Lapidoth and the Lapidoth Heletz LP. (TASE: LPHL) partnership, and also privately.
This holding is likely to give Luxenburg the deciding vote in the future if the combination of Shikun & Binui, Apollo Global, and the Dayan family wants to pass decisions requiring a majority of the other ADO Group shareholders , or if a struggle for control of ADO Group occurs. Such a position will enable Luxenburg to sell his shares at a higher price than the one at which he bought them, whether as part of an offer to purchase for all of the outstanding ADO Group shares culminating in a delisting of the company, or in some other significant step in the company sought by the controlling shareholders.
The joint management agreement in ADO Group will be in effect until the end of 2022. The agreement is subject to successful completion of Shikun & Binui's offer to purchase.
Published by Globes [online], Israel Business News - www.globes-online.com - on September 25, 2017
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