Israel Canada launches takeover bid on Norstar

After several stormy months for the shareholders of Norstar (TASE: NSTR), which controls the real estate company Gazit Globe (TASE: GZT), Barak Rosen and Asaf Tuchmair, who control Israel Canada (TASE: ISCN), are launching a takeover bid for the Company. Israel Canada this morning announced a non-binding offer to Norstar’s shareholders to buy control of the company for NIS 55.55 per share, an offer that values ​​Norstar at DKK 1.95 billion. NIS. The offer is 15.3% above Norstar’s opening price on the Tel Aviv Stock Exchange this morning. Since the offer was announced, Norstar’s share price has risen 14.11% to NIS 55.00.

The offer can be accepted in two forms: in full or in part (up to 50%) in shares of Gazit Globe owned by Norstar, in the ratio of 1.88 Gazit Globe shares for each Norstar share. The offer comes a day before Norstar is expected to proceed with a dramatic move to distribute 14% of the Gazit Globe in kind to its shareholders. Norstar’s board of directors will therefore meet today to discuss Israel Canada’s offer, and will probably freeze the dividend distribution so as not to interfere in any negotiations.

The need for an offer from Israel Canada to all Norstar’s shareholders, rather than a partial purchase of shares in it, arises from the fact that Israel Canada must gain full control of Norstar, otherwise it will from an ownership pyramid that is prohibited under the Merger Act . Israel Canada’s move comes after weeks of fighting for Norstar against the other shareholders, among them controlling shareholder Chaim Katzman.

Gazit Globe is an income-producing real estate company that has commercial centers in Israel and abroad through various subsidiaries. Its current market value is NIS 4.86 billion, while the market value of Norstar, which owns 51% of Gazit Globe, was NIS 1.76 billion at the opening of today’s trading. Norstar reached this market value after a 52.8% increase in the share price since the beginning of 2022 and an increase of 88% in the last six months.

Although Israel Canada’s offering looks attractive to Norstar shareholders relative to its current market price, it rates Norstar 39% below the top price of NIS 91 on February 14, 2020, just before the outbreak of the coronavirus pandemic.

The share price fell to NIS 11.60 in August 2020 due to the closure of its commercial centers in Israel and abroad. Despite the subsequent easing of Covid-related restrictions, the share price has not returned to the level before Covid.

Katzman’s dilemma

The controlling shareholder and key person at Gazit Globe, through Norstar, is the CEO of both companies Chaim Katzman. A takeover of the Gazit Globe by Israel Canada would raise the question of whether he has reached the end of his role in the company. The answer is still not clear because part of the Israel Canada offer is to pay up to 50% of the consideration in shares of Gazit Globe. This means that Katzman can choose whether to sell Norstar shares for cash, or to receive Gazit Globe shares. In the latter case, he will still be a powerful figure in the company the day after.

The ball is now in the court of Norstar’s board, which will decide whether to start negotiations. With a 15% premium, the offer is positive news for Nortsar shareholders, and while Israel Canada’s move is a surprise, it has a chance to succeed. Nevertheless, a non-binding offer does not even require reporting under US law, unlike the situation in Israel. We may therefore not look at the final act, and there may be more surprises in store.

If Katzman decides to accept the offer and leave the group, it will head the Gazit Globe at the end of decades. Barak Rosen met Katzman in Miami last week to present his offer. He sent the financial details in a WhatsApp message at the end of the week. Norstar’s board of directors must now make a decision.

Published by Globes, Israel business news – – on April 24, 2022.

© Copyright by Globes Publisher Itonut (1983) Ltd., 2022.

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