Discount Investment Corporation unveiled early on Sunday its terms for buying shares it doesn’t already own of Koor Industries from parent IDB Development Corporation and the public in a deal valued at NIS 1.09 billion in the latest move by Nochi Dankner to keep IDB group creditors at bay.
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Under the terms disclosed to the Tel Aviv Stock Exchange, Discount’s offering price will largely be determined by the value of Koor's 1.95% stake in Swiss bank Credit Suisse. As of last Thursday, that would impute a value of NIS 70.49 for each Koor share and values the entire company at NIS 3.34 billion company, a 15% premium over its Thursday closing.
As a result, Koor shares closed 6.4% higher in TASE trading to NIS 65.40. Discount Investment, which now owns 67.3% of Koor, climbed about 5.1% to close at NIS 21.20. IDB Development’s shares aren’t traded but its Series Chet bonds rose close to 1.9%.
The merger would provide debt-ridden IDB Development with a sorely needed dose of NIS 446 million in cash for its 13.35% stake in Koor. The remainder of the proceeds would go to the public, which owns 16% of Koor shares. Koor would be delisted from the TASE.
The terms of the merger agreement were determined through negotiations between independent merger committees representing both companies, with assistance from outside legal advisers and based on valuations prepared by independent outside appraisers.
Completion of the deal is subject to a number of preconditions, including approval by a vote of Koor and Discount Investment shareholders without vested interests scheduled to take place on September 15. Koor yesterday asked a Tel Aviv District Court to exempt it from meeting a mandated profitability standard it would normally need to meet in order to declare the dividend.
Aside from the cash that will go to IDB Development, the companies claim in the prospectus issued yesterday that the merger will streamline operations by eliminating a tier in IDB’s pyramidal corporate structure.