Israeli Capital Market Authority Challenges Mor Gaml's Bid to Reshape Orion's Board

The shareholders meeting of Israeli real estate company Orion convenes today to vote on its board composition amid regulatory scrutiny. The conflict pits Mor Gaml investment house, seeking to appoint four directors to revamp Orion after its spin-off from G City, against Norstar, controlled by Haim Katzman, which holds 15.7% of Orion shares. The Capital Market Authority (CMA), led by Amit Gil, intervened unusually by sending a stern letter to Mor Gaml, suggesting the institutional investor is overstepping its financial role and attempting to control company management, casting doubt over the entire vote.

Mor Gaml aims to appoint four directors: Yossi Zeituni, Yishai Sasson, and Ariel Peretsman and Yoav Carmi from Beita Living, a real estate firm active in Central and Eastern Europe including Poland, where Orion holds three former G City assets. These assets were spun off to reduce G City's leverage. Mor Gaml argues it wants to revitalize Orion, whose stock has lost 35% since the December spin-off, and to assess CEO Dina Ben Ari's suitability. Mor acquired most of its shares in Orion's June equity offering, which raised 77 million shekels.

The CMA's letter raised concerns that Mor Gaml's involvement may violate restrictions on institutional investors by engaging in company management or exerting undue influence. The regulator requested clarifications on the procedural efficiency of Mor and Beita's joint nomination of four directors, the implications of their cooperation for control rights, and Mor's plans post-meeting regarding the chairman, CEO, and board composition. The CMA warned it may impose sanctions, including forced divestment or fines, if Mor's responses are unsatisfactory.

Norstar is expected to oppose Mor's nominees and support the current chairman Eran Yaakov, incoming G City CEO Keren Kalifa, and former Harel investment manager Sami Babkov. Analyst Investment House, the only other institutional shareholder, voted against Beita's nominees previously and its stance today remains uncertain. The vote follows a failed attempt two months ago to appoint the same directors. The outcome will reveal the balance of power in Orion's governance amid regulatory pressure and shareholder disputes.