Alfred Akirov Seeks to Delist Alrov Real Estate with 22% Premium Offer

Alfred Akirov, the controlling shareholder of Alrov Real Estate, has announced his intention to launch a full tender offer to acquire all outstanding shares of the company. The offer is set at 32,241 agorot per share, representing a premium of approximately 22% over the share price prior to the announcement. This valuation prices the entire company at around 6.6 billion shekels.

In response to the news, Alrov's stock surged by 19% to approximately 31,650 agorot, valuing the company at about 6.46 billion shekels, just 2% below the offer price. The market's reaction suggests a high probability of the offer's completion, as the small gap between the current trading price and the offer price indicates investor confidence.

A full tender offer is the mechanism by which a controlling shareholder aims to buy out public shareholders and take a company private. In Israel, if the offeror secures over 95% of the company's shares, remaining shares can be compulsorily acquired. The company is then delisted, and dissenting shareholders may seek judicial review of the price if they feel unfairly treated. If the response rate is insufficient, the offer fails, and trading continues.

Akirov's move is reportedly driven by a perceived undervaluation of Alrov's assets, which include luxury hotels in Paris, London, and Amsterdam, as well as the Mamilla complex in Jerusalem and other income-generating properties. Despite this portfolio, the company has traded at a low price-to-earnings multiple with minimal recent returns. Alrov's net profit also saw a significant decrease of about 71% to 172 million shekels in the last reported quarter, partly due to accounting factors.

This delisting attempt aligns with a recent trend on the Tel Aviv Stock Exchange, where controlling shareholders are taking advantage of low valuations to privatize established companies. The next formal step involves publishing the tender offer details and timeline, after which the decision rests with institutional investors and minority shareholders. Historically, such offers sometimes require the bidder to improve the price to achieve the necessary acceptance rate.