Tidhar Group to Cut Staff After Distributing Large Bonuses Post-IPO
Translated & summarized from Bizportal by baba
Tidhar Group announced a restructuring plan including staff reductions and division consolidation, aiming to save 30 million shekels annually. This follows a large IPO in June and significant bonus payouts to employees and executives. While the company's stock has underperformed its IPO valuation, its business operations have shown growth. CEO Ori Levin stated the move is part of a strategic plan for efficiency and growth, acknowledging the difficulty of employee departures.
The story in 6 lines · by baba
- Tidhar Group will cut staff and consolidate divisions to save 30 million shekels annually.
- The company recently completed a 1.7 billion shekel IPO in June.
- Tidhar paid out 54 million shekels in bonuses and grants to employees post-IPO.
- Controlling shareholders Gil Geva, Aryeh Bachar, and Mark Weissman each hold about 19.7% of the company.
- The company's stock is trading below its IPO valuation.
- First-half revenues increased 10% to 1.64 billion shekels, with net profit up 36%.
Tidhar Group, which recently completed a significant stock offering, announced a restructuring plan that includes workforce reductions at its headquarters, consolidation of divisions, and a decrease in management layers. The company estimates these measures will save approximately 30 million shekels annually. Tidhar has not yet specified the number of employees to be laid off, the one-time costs associated with the restructuring, or the projected completion date.
The reorganization will see the management and planning division merged into the initiative division, with various units consolidated to eliminate redundancies. Tidhar states the goal is to simplify the organizational structure, improve efficiency, and enhance control over its operations in residential development, execution, and income-generating real estate.
This announcement comes about four months after Tidhar's IPO, which raised approximately 1.7 billion shekels at a valuation of about 8 billion shekels. For controlling shareholders Gil Geva, Aryeh Bachar, and Mark Weissman, this represented a substantial increase in their holdings, with each now owning about 19.7% of the company, valued at roughly 1.5 billion shekels each.
However, the company's stock performance since the IPO has been mixed. While it has recovered somewhat, it currently trades at a valuation of around 7.5 billion shekels, below its IPO price. Despite this, Tidhar's business operations show growth, with first-half revenues up 10% year-over-year to 1.64 billion shekels and adjusted net profit increasing by 36% to 144 million shekels.
The timing of the layoffs raises questions, as Tidhar recorded significant expenses in its second-quarter reports for bonuses and grants to employees and former employees totaling about 54 million shekels, plus an additional 8.2 million shekels for controlling shareholders and directors following the IPO. While these were one-time payments, the transition from distributing large bonuses to implementing staff cuts within months has drawn scrutiny regarding the company's expense structure presented to the public market.
Ori Levin, CEO of Tidhar Group, stated that the company is in a continuous process of growth and development, implementing its strategic plan focused on growth and efficiency. He described the reorganization as a move to focus operations, simplify the structure, strengthen control over the value chain, and support the group's long-term strategy. Levin acknowledged the difficulty of parting with employees, expressing gratitude for their contributions and confidence in their future success.
