Tzachi Abu Acquires 26% Stake in G City from Chaim Katzman for NIS 661 Million

Ari Real Estate, controlled by Tzachi Abu, is purchasing a 26% stake in G City from Norstar, owned by Chaim Katzman. The deal involves 44 million shares for a total of NIS 661 million, valuing G City at NIS 2.55 billion, which is 30% above its stock market valuation. Payment will be split, with NIS 230 million paid upon closing and the remaining NIS 431 million due six months later. Ari Real Estate will deposit NIS 20 million with the seller, which will be forfeited to G City if the deal falls through for reasons not attributable to the seller.

Both parties hold options to buy or sell an additional 12 million shares, about 7% of the company, which would increase Ari Real Estate's stake to 33%, granting it control of G City. Currently, control is shared between Ari Real Estate and Norstar, which may facilitate G City's plans to list its subsidiaries in Poland and Gazit Israel without violating Israeli anti-concentration laws.

The agreement also includes a capital raise of NIS 1 billion for G City, with Ari Real Estate contributing NIS 280 million and Norstar NIS 260 million. A shareholders' agreement was signed between Norstar and Ari Real Estate, stipulating that as long as Norstar holds over 20% of G City shares (currently 54%), control remains joint, with both Abu and Katzman appointing a co-chairman. Katzman currently serves as sole chairman. Norstar will also have the right to appoint two regular directors and an external director.