Investors Agree to Acquire Arkia Amidst Ownership Dispute
Translated & summarized from Ice by baba
A group of investors led by Yariv Lerner has reached a preliminary agreement to acquire Arkia Airlines from shareholder Avi Nakash and the Workers' Corporation. The deal aims to inject tens of millions of dollars to save the financially struggling airline. However, a dispute within the Nakash family and opposition from employees, who fear dilution of their shares, pose significant challenges to the acquisition. Other potential buyers, including Israir Airlines, are also exploring options, but a merger faces regulatory hurdles.
The story in 5 lines · by baba
- Investors Yariv Lerner, Avi Elkiaim, and George Varror reached a preliminary deal to buy Arkia Airlines.
- The deal requires injecting tens of millions of dollars to rescue Arkia from a $50-60 million deficit.
- Brothers Joe and Rafi Nakash oppose the deal and plan their own capital injection to retain control.
- Arkia employees threaten renewed sanctions over fears of share dilution and job security.
- Israir Airlines and the Airports Authority workers' committee had previously considered acquiring Arkia.
A dramatic development has occurred in the control struggle for Arkia Airlines, with a group of investors reaching a preliminary agreement to purchase the company. The investor group includes businessmen Yariv Lerner, Avi Elkiaim, and George Varror. The preliminary agreement was signed with Arkia shareholder Avi Nakash and the Workers' Corporation (TUT), which holds 22% of Arkia's shares and a veto right over potential buyers. This deal involves injecting tens of millions of dollars into the airline, which is facing a deficit of approximately $50-60 million and is at risk of insolvency. Under the proposed plan, Yariv Lerner is expected to join the company after due diligence is completed, with the funds solely intended for the company's rescue, not as cash compensation for the current controlling shareholders.
However, the path to finalizing the deal is fraught with obstacles, primarily an intense internal dispute within the Nakash family. Brothers Joe and Rafi Nakash, along with their representative Avi Hurumro, deny the ongoing negotiations and are in conflict with their brother Avi Nakash. Their alternative plan is to inject capital themselves, aiming to dilute the employees' holdings and prepare Arkia for a future sale at a higher valuation, allowing them to retain control and profit. This potential dilution has sparked a direct confrontation with the employees.
Avi Edri, Chairman of the Workers' Corporation Directorate, accused the Nakash group of attempting to "sever the business arm and completely eliminate the workers' corporations." He reminded them that employees had already made significant sacrifices for the company's recovery, including agreeing to 400 layoffs and a 50% salary cut during the COVID-19 pandemic. Edri also revealed that the Nakash group recently thwarted a 150 million shekel investment from another investor, Eliot Zaml, and insisted on proceeding with a deal with businessman Ezra Younger, who demanded that Arkia cease operations on Saturdays, a demand the employees immediately rejected.
The current drama sheds new light on recent speculation surrounding Arkia. Israir Airlines had previously announced it was considering acquiring its competitor, and the Airports Authority workers' committee had also explored purchasing the company using pension funds. However, market sources are now tempering enthusiasm for a potential merger with Israir. Given Arkia's immediate financial needs for cash, a merger with a competing airline would require approval from the Competition Authority, a lengthy bureaucratic process that could jeopardize Arkia's future.
Mentioned
