Business in Brief Shekel Moves Sharply Against Dollar as Bank of Israel Holds Interest Rate

Gazit Globe unit in $1.7 billion takeover of Norwegian mall owner; Discount names team to chart recovery plan; Benchmark index shows a decline, despite a rally in energy stocks.

Karnit Flug holds up a newly designed 50 shekel banknote during its presentation at a news conference in Jerusalem, September 10, 2014.
Karnit Flug holds up a newly designed 50 shekel banknote during its presentation at a news conference in Jerusalem, September 10, 2014.Credit: Reuters

Gazit Globe unit in $1.7 billion takeover of Norwegian mall owner

Citycon, a Finnish mall owner 42.8%-owned by Israel’s Gazit Globe, said Monday it would buy Norwegian shopping center owner Sektor Gruppen for about 1.5 billion euros ($1.7 billion) to boost growth in the Nordics. Citycon said it intended to partly finance the deal through a 600-million-euro rights issue, backed by Gazit and its other big shareholder, the Canada Pension Plan Investment Board. Sektor Gruppen has 20 fully- or majority-owned shopping centers, making it Norway’s second-biggest mall owner. Citycon, which owns and operates 35 shopping centers in Scandinavia and Estonia, said the deal would increase its gross asset value from 3.4 billion euros to 4.9 billion euros and make it Europe’s third-largest mall owner. “It is a big move into a new market, which makes them less dependent on individual countries and will help them in acquiring capital in the future,” Evli analyst Jaakko Tyrvainen said. Shares of Gazit ended down 1.4% at 47.80 shekels ($12.34). (Michael Rochvarger and Reuters)

Shekel moves sharply against dollar as Bank of Israel holds interest rate

Shekel trading was stormy Monday as the Bank of Israel held interest rates unchanged. The central bank left the benchmark interest rate at 0.1% for a third straight month, citing forecasts for inflation to pick up. Although economists hadn’t expected the central bank to act, the dollar appreciated to 3.911 shekels during trading Monday and was set at a Bank of Israel rate of 3.873 half an hour before the rate announcement was issued. The announcement pushed the dollar down as much as 3.8637 in late trading. The euro made an even bigger move, peaking at 4.2993 and trading as low as 4.2418 late in the day. “The Bank of Israel doesn’t want to find itself lowering interest rates while the inflation rate is rising,” said Omer Kopylov of USG Capital. “Nevertheless, it it’s clear that under current circumstances the Bank of Israel will have to continue buying dollars to preserve the shekel-dollar rate.” (Dror Reich)

Discount names team to chart recovery plan

Discount Investment Corporation, the IDB group holding company that controls its stakes in Super-Sol and Cellcom Israel, appointed a board committee to devise an operational and financial strategy for the heavily indebted company. Eduardo Elzstain, IDB’s controlling shareholder, has injected money into Discount’s parent company, IDB Holding Corporation, that will enable it to join a Discount rights offering aimed at raising badly needed cash. But while Discount had 1.2 billion shekels ($310 million) in cash on its books, given the debt repayments it faces that sum won’t last it more than 18 months. Discount reported over the weekend that its first-quarter net profit plunged 97% from a year earlier to just 15 million shekels, mainly because it registered a one-time gain of 324 million shekels a year ago from the sale of Given Imaging. Shares of Discount, whose assets and debt are about equally balanced after the first-quarter results, dropped 2.1% to end on Monday at 6.94 shekels. (Michael Rochvarger)

Benchmark index shows a decline, despite a rally in energy stocks

Tel Aviv shares took a dip Monday in a day of quiet trading as the Wall Street, London and a host of other global stock markets were closed. The benchmark TA-25 index finished down almost 0.5% at 1,707.74 points while the TA-100 declined 0.3% to 1,478.57, on turnover of just 919.5 million shekels ($237.4 million). The TA-Oil and Gas index rose sharply on Antitrust Commissioner David Gilo’s resignation announcement (see story on this page), but Teva Pharmaceuticals ended down 1.25% at 237.50 and Nice Systems tumbled 4.3% to 245.10. Other big losers were Israel Corporation, down 3.7% at 1,396 shekels and Alrov, off 32.6% at 1,148. Tech shares were mostly higher, with EZchip advancing 4% to 62.58 shekels, Mazor Robotics gaining 3.5% to 25.03 and TowrJazz adding 3.2% to 60.30 shekels. (Dror Reich)

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