Shimon Mizrahi Poised to Become Maccabi Tel Aviv's Largest Shareholder

The battle for control of Maccabi Tel Aviv basketball club is intensifying as Shimon Mizrahi appears set to exercise his right of first refusal, potentially becoming the largest shareholder. Initially, Mizrahi had announced he would sell his shares to Jason Levien, but he has since reversed this decision. Now, only Udi Recanati is expected to sell 7.5% of the club's shares to Levien.

The deal requires approval from the general assembly of shareholders, scheduled for Sunday, though the board of directors already gave preliminary approval. Mizrahi, Udi Ashkenazi, and Udi Recanati voted in favor of Levien's entry, while Richard Deitz opposed it. It is anticipated that the general assembly will also approve Levien's stake.

Mizrahi's change of heart is seen as a strategic move to maintain significant control. By not selling his shares to Levien, he aims to use his right of first refusal on Recanati's shares. This maneuver could increase Mizrahi's ownership from 14.5% to approximately 40.5%, making him the largest shareholder.

Meanwhile, Richard Deitz, who holds 17.5% of the shares, had previously announced his intention to exercise his right of first refusal on the Recanati family's shares, which would have increased his stake to 55.5% or even 62%. However, Mizrahi's status as a director grants him priority in such transactions, allowing him to acquire over 26% of the 29% Recanati intended to sell.

If Mizrahi exercises his right, Deitz's portion of the Recanati shares would be significantly reduced, leaving him with only about 2% of those shares. Combined with his existing stake and Ben Ashkenazi's shares, Deitz might end up with around 28.5%, though this could be further diluted if other shareholders also exercise their rights.

Should shareholders exercise their rights of first refusal, the situation could lead to legal disputes. The potential for shareholders who recently agreed to sell to then exercise their right to buy could be interpreted as an attempt to prevent Deitz from gaining control, rather than genuinely increasing their own stakes. The general assembly's vote is now the next crucial step.