Nochi Dankner wants to delist and then break up Koor Industries Ltd. (TASE:KOR). IDB Holding Corp. Ltd. (TASE:IDBH) holding company Discount Investment Corporation (TASE: DISI) and its subsidiary Koor announced that they are in talks on a merger, as part of Dankner's effort to restructure IDB and service the company's debt to its bondholders and the banks.
Discount Investment owns 70.1% of Koor. Under the proposed merger, Koor's assets will be transferred to Discount Investment. Koor will be liquidated, its shares delisted, and its shareholders will receive a cash payment for their holdings. The companies plan to complete the deal by June.
Discount Investment's parent company, IDB Development Corporation, directly owns 13.35% of Koor. Discount Investment will reportedly pay Koor's other shareholders NIS 750-850 million for their shares, which means that IDB Development will make around NIS 400 million. IDB Development cannot distribute dividends at this time, because of a negative balance for distribution. If a deal is closed, Discount Investment will have NIS 5.6 billion in cash, and its debt will total NIS 8.3 billion.
Koor's main holdings are 40% of agrochemicals maker Makhteshim Agan Industries Ltd. and a stake in Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ).
Dankner has been selling off IDB assets. Sales include the controlling interest in Makhteshim, Fundtech, and just this week, the sale of 55% of Clal Industries and Investments Ltd. (TASE: CII) subsidiary Mashav Initiation and Development Ltd. (which owns Nesher Israel Cement Industries Ltd. and 50% of Taavura Holdings Ltd.). IDB's proceeds from these sales total several billion shekels.
A Koor-Discount Investment merger will also affect the two companies' bondholders. Koor's bond debt is NIS 1.9 billion, and Discount Investment's bond debt is NIS 4.7 billion. The bondholders are waiting for the companies to announce the proposed structure of the merger, before responding to it.
Some bondholders told "Globes" that the proposed merger is not a done deal. "I assume that Koor's bondholders will have to be given more guarantees or a better yield for them to approve the merger," a bondholder in both companies told "Globes".
After the TASE permitted trading in the two companies' shares to resume, Koor's share price rose 2.5% to NIS 49.20, giving a market cap of NIS 2.3 billion, but Discount Investment's share price fell 2.4% to NIS 24.25, giving a market cap of NIS 2.1 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on February 13, 2012
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