Investment Firm May Accept Low Offer for Pension Funds' Shares
Translated & summarized from Israel Hayom by baba
Businessman Alfred Akirov plans to acquire public shares in Alrov at a price significantly below its book value, with the investment house More potentially agreeing to sell its clients' holdings. The offer of 322.41 shekels per share values Alrov at approximately 6.5 billion shekels, about 900 million shekels less than its equity. Low stock liquidity and the potential for Akirov to force a sale are cited as reasons for More's possible acceptance, though minority shareholders are exploring legal options. More has not yet commented on the situation.
The story in 6 lines · by baba
- Businessman Alfred Akirov is making a tender offer for Alrov shares at a price below book value.
- Investment house More may accept the offer for its clients' pension and provident fund holdings.
- Akirov's offer values Alrov at 6.5 billion shekels, nearly 900 million shekels below its equity.
- Low stock liquidity is a key factor influencing More's potential decision to accept the offer.
- Minority shareholders are considering legal action and approaching regulators over the proposed deal.
- More has not yet provided a comment on the situation.
Businessman Alfred Akirov has announced his intention to make a tender offer for shares in the public company Alrov, at a price significantly below the company's book value. Surprisingly, Akirov stated that the investment house More, which holds Alrov shares through its clients' pension, provident, and study funds, is expected to agree to the offer if it is formally presented. Akirov's announcement has caused a stir in the capital markets, as his desire to acquire Alrov shares at a low price is clear, but More's potential agreement to such a price is puzzling, especially since it involves client funds, not the firm's own capital.
Akirov is offering 322.41 shekels per share, which represents approximately 87% of Alrov's equity as of the second quarter's end. This means he seeks to buy public holdings at about 13% below the company's book value, a price considered unreasonably low by market sources given Alrov's assets. Akirov currently holds nearly 90% of Alrov's shares, while More's clients hold just under 6%. If More accepts, Akirov could cross the 95% ownership threshold, potentially allowing him to force other public shareholders to sell their shares under the law.
Alrov's total equity is valued at approximately 7.4 billion shekels, while Akirov's offer values the company at about 6.5 billion shekels, a difference of roughly 900 million shekels. Alrov possesses significant business operations, including a 14% stake in Clal Insurance, shares in Bank Leumi worth about 300 million shekels, and real estate and hotel activities in Israel and Switzerland. The company reported a profit of nearly 120 million shekels in the second quarter.
A key reason cited for More's potential agreement is Alrov's very low stock liquidity, with only about 1 million shekels in shares trading hands daily. This makes it difficult for More to sell its holdings without impacting the share price. To exit gradually, More might employ a "one-third turnover" strategy, selling only up to a third of the daily trading volume, which could take years to liquidate its entire stake. Some market sources believe More could have negotiated a better price or pushed for increased dividend payouts from Alrov.
Minority shareholders are considering legal action, fearing that More's acceptance will enable Akirov to force a sale at the low price. They are also contemplating approaching the Israel Securities Authority for an explanation of the deal's valuation, which could support a class-action lawsuit. More has not yet responded to requests for comment.