Trust Crisis Between Katzman and Abu Threatens G City Sale Deal

The planned sale of control over G City faces a serious risk of collapse due to a deep trust crisis between seller Haim Katzman and buyers Tzachi Abu, Kidan Dahari, and Yaron Adiv. The parties were expected to submit transaction documents to the Israeli Competition Authority for approval, but tensions have escalated over contractual disagreements. Katzman, who controls G City through Norstar, demands the agreement between Abu and the partners be handed over, but Abu refuses, insisting his commitment to the deal terms suffices. Meanwhile, Abu demands access to G City's board decisions on debt issuance and a golden parachute granted to the CEO of the Kalifa fund, appointed by Katzman.

The dispute intensified after a recent meeting at Katzman's home, after which Abu refused further talks. Katzman revealed plans to raise about 260 million shekels through bonds, which Abu opposed, arguing the company does not need financing due to the expected capital injection of about one billion shekels from the deal. The deal was originally structured in two stages: Ari Real Estate (controlled by Abu) would buy 26% of G City for 661 million shekels, then 7% for 200 million shekels. Katzman later proposed completing the purchase in one payment for 33% of shares, but Abu demanded a 10% discount, which Katzman rejected.

Accusations of unethical behavior surfaced, with Katzman’s camp criticizing Abu and Dahari for calling to cut senior salaries and implying Katzman had no future role. Katzman was particularly offended by Dahari’s comparison of him to businessmen who went bankrupt, prompting Katzman to scrutinize the financials of Yespro-Tanofort, owned by Abu and partners, and question their readiness for the deal. Abu was angered by Katzman’s bond issuance and approval of the CEO’s golden parachute despite his objections.

Sources suggest Katzman intended to remain a significant partner post-sale, preserving influence and family roles, but realized Abu’s acquisition strategy did not require consolidating G City’s heavy solo debt of about 9 billion shekels into Ari Real Estate’s accounts, reducing Katzman’s leverage. Market reaction to the deal announcement was negative, with Ari Real Estate’s stock dropping over 20%, though it recently recovered, possibly due to reports of the dispute. Both sides publicly deny wanting to cancel the deal, but insiders believe the real question is who will bear the cost if the transaction falls through.