Businessmen in Talks to Acquire Arkia Airline, Agree on Initial Framework
Translated & summarized from Calcalist by baba
A group of businessmen, including Yariv Lerner, Avi Elkiaim, and George Varour, have agreed on a preliminary framework to acquire the Israeli airline Arkia. The deal requires injecting tens of millions of dollars to address the company's equity deficit. However, the current owners, the Nakash brothers, are reportedly seeking to dilute worker shareholdings and may inject capital themselves, leading to a conflict with employees. The workers' union chairman has accused the Nakash family of obstructing potential investors and harming employee interests.
The story in 5 lines · by baba
- Three businessmen, Yariv Lerner, Avi Elkiaim, and George Varour, are in talks to buy the airline Arkia.
- An initial agreement framework has been reached with current shareholder Avi Nakash and the workers' union.
- The deal requires injecting tens of millions of dollars to cover Arkia's equity deficit.
- The Nakash brothers are reportedly seeking to dilute worker shareholdings, causing conflict.
- The workers' union chairman accuses the Nakash family of obstructing a deal and harming employee interests.
A group of three Israeli businessmen, Yariv Lerner, Avi Elkiaim, and George Varour, have reached a preliminary agreement on a framework to acquire the airline Arkia. Varour and Elkiaim have finalized understandings with both Avi Nakash and the "Tot" workers' corporation, which holds a 22% stake and veto power over potential buyers. Varour, who made his fortune in lab-grown diamonds and operates from Dubai, is a co-owner of Hapoel Ramat Hasharon football club. Elkiaim is a controlling shareholder in the services company Shahar and co-owner of the insurance company Ankor. Lerner, known for his expertise in company turnarounds, is expected to join if due diligence is successful. The proposed deal includes injecting tens of millions of dollars into Arkia, which faces a potential insolvency due to a $50-60 million equity deficit.
However, the acquisition faces obstacles. The other Nakash brothers, Joe and Rafi Nakash, along with their representative Avi Khormro, are pursuing separate negotiations and aiming to dilute the workers' holdings. This has led to a severe conflict with the employees, who are threatening industrial action. Avi Nakash is no longer involved in the company's management but remains a shareholder. The Nakash brothers reportedly intend to inject capital themselves to revive the company, dilute worker shares, and prepare it for a future sale at a higher valuation, as the current deal structure does not offer them immediate cash returns.
Avi Adry, Chairman of the "Tot" workers' board, stated in a letter to employees that the Nakash group insisted on not selling shares to investor Elliot Zamel, who was prepared to invest approximately 150 million shekels. Adry also claimed the Nakash brothers favored a deal with Ezra Younger, an ultra-Orthodox businessman from New York, who sought to cease operations on Saturdays, a move opposed by the workers. The Nakash brothers are willing to inject capital only if worker holdings are diluted, which the employees resist, citing past concessions like 400 layoffs and a 50% salary cut during the COVID-19 pandemic.
Adry further alleged that the Nakash group plans to seek approval on Sunday for a decision he believes would effectively eliminate the workers' corporate entity within Arkia. He emphasized that two serious investors have been secured, with one in advanced negotiations with Avi Nakash. Adry criticized the Nakash family for hindering new investors and attempting to "sever the business arm" of the workers, disregarding previous agreements and the employees' crucial role in saving the company from collapse.
The possibility of a deal with Israir is considered very low, primarily due to Arkia's immediate capital needs and Israir's own internal disagreements and the lengthy antitrust approval process required.
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