Business in Brief: Tech Exec Warns of Fallout After Israel Reforms Corporate Tax on Int'l Firms

Check Point CEO warns tax policies could drive more company operations abroad | Summit closes in on Jerusalem Economy Corporation | 12% of TASE-traded companies carry collapse warning in 2015 | Chinese firm Fosun confirms it’s buying Ahava |Tel Aviv shares take sharp turn higher

Send in e-mailSend in e-mail
Send in e-mailSend in e-mail
check point
Check Point founder Gil Shwed.Credit: Moti Milrod

Check Point CEO warns tax policies could drive more company operations abroad

Check Point Software Technologies is weighing moving more of its operations broad through acquisitions because of Israeli tax policies, CEO Gil Shwed told a finance technology conference Monday. “The state’s actions are pushing out Israel and international high-tech companies,” he said, adding that the Income Tax Authority alters agreements over tax rates.

“That, together with the stigmatization of the business sector, it doesn’t pay to be in Israel. ... I hope Check Point will be here forever, but that doesn’t mean we’ll pay all our taxes here. Maybe in the future we’ll pay Israel $50 million and Switzerland $300 million.” Shwed accused the media of falsely reporting on tax benefits and bullying policy makers into introducing draconian taxes. “I’m a big company and haven’t gotten a shekel from the government but I’ve paid a lot of taxes. I could choose not to be here,” he said. (Shelly Appelberg)

Summit closes in on Jerusalem Economy Corporation

Summit Holdings, Zohar Levy’s property development company, moved a step closer Monday to taking control of Jerusalem Economy Corporation, after it called for a general shareholders meeting to vote on replacing all of JEC’s board, except for its two outside directors. Summit named its candidates for the board and asked shareholders to reduce its size by two, to a maximum of seven.

The request comes just weeks after Summit gained 20% of the financially troubled property investor with holdings in Israel and Russia, to become its single biggest shareholder. Summit is exercising its right, as owner of over 10% of the company, to call a shareholders meeting, but there are two obstacles to Summit’s taking control of JEC: the Business Concentration Law, and the fact that it holds less than the 25% minimum to be a designated controlling shareholder. JEC shares ended up 4% at 6.73 shekels. (Michael Rochvarger)

12% of TASE-traded companies carry collapse warning in 2015

The Tel Aviv Stock Exchange (TASE) building in Tel Aviv.Credit: Bloomberg

Some 12% of all the companies traded on the Tel Aviv Stock Exchange had a “going concern” warning attached to their 2015 financial reports, market research firm CofaceBDI reported Monday. Over a third of the publicly traded companies with the warning, which auditors place on businesses they believe are at risk of collapse, were in the biomedical sector. It accounts for just 9% of all TASE companies but it includes large numbers of startups that are still developing and don’t have significant sales.

The property sector was also heavily represented, accounting for 19% of all TASE-listed companies carrying the warning in their reports, CofaceBDI said. Some 15% of all investment and holding companies had going concern warnings in 2015, although that was down from 20% in 2014, it said. (Uri Tomer)

Chinese firm Fosun confirms it’s buying Ahava

A woman reaches for an AHAVA Dead Sea cosmetic product manufactured in the Israeli Kibbutz settlement of Mitzpe Shalem, in the occupied West Bank.Credit: AFP

China’s Fosun Group confirmed reports on Sunday that it was buying the Dead Sea cosmetics manufacturer Ahava for 290 million shekels ($77 million), a deal that will help it to tap increasing demand for health-focused and personal care products in China. “We will endeavor to extend the success of this brand to China and other countries,” Fosun Group CEO Liang Xinjun said in an email statement. The deal comes after some setbacks for Fosun, whose huge appetite for M&A has seen it amass interests in sectors from pharmaceuticals to mining and hospitality. Its chairman briefly went missing late last year, and in February it shelved a plan to buy a controlling stake in Israeli insurer Phoenix. Ahava, which operates a plant in the Israeli-occupied West Bank, has been the target of pro-Palestinian groups who have called for a boycott of its products. The company has said it may move its plant from the West Bank. (Reuters)

Tel Aviv shares take sharp turn higher

Tel Aviv shares took a sharp turn higher Monday, lifted by recovering world oil prices and rallies for stock markets in Europe and the United States.

The benchmark TA-25 index ended up just over 1% at 1,451.95 points, while the TA-100 rose 1% to 1,255,39. Turnover also picked up, with 1.21 billion shekels ($320 million) in shares changing hands. The market was lifted by big moves higher by Bank Leumi and Bank Hapoalim, which both rose about 2.4% to 13.40 and 19.27 shekels, respectively. Biomed shares also rallied, led by an 18.2% rise for Mannkind shares to 5.73. Can-Fite jumped 11.5% to 6.30 after it reported that its CF602 drug candidate showed “statistically significant” full recovery from erectile dysfunction in a preclinical diabetic model. But energy shares slid, as did telecommunication stocks, after rallying Sunday. Cellcom Israel declined 4% to 27.80 and Partner Communications lost 2.7% to 17.78. Bezeq, the most active share of the day, was down 0.8% at 8.24 by close. (Uri Tomer)