L.A.-based Israeli Brothers Make Offer for Ailing Jerusalem Economy Corp

Lowball offer is 12% under Sunday’s closing price, but is expected to be raised.

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Two Los Angeles-based Israeli real estate entrepreneurs who have never invested in their home country made an offer Sunday for a controlling stake in the financially troubled property company Jerusalem Economy Corporation.

The tender offer, made by Naty and Ofer Saidoff through a British Virgin Islands company called Shayma Investments, could put them on a collision course with Summit Real Estate, which is controlled by Zohar Levy and has accumulated a 19.4% stake in JEC and sees itself as a strategic shareholder.

Shayma said it was offering 7.25 shekels ($1.92) a share, or a total of 533.6 million shekels, which is a 5% premium on the share’s average price over the last six months but 12% less than its closing price on the Tel Aviv Stock Exchange this Sunday. It is also 29% less than shareholders’ equity, which works out to 10.26 shekels a share.

The lowball offer didn’t generate any excitement on the stock market, where JEC’s share price ended unchanged. But the Saidoffs, who have previously tried to buy a stake in JEC, are expected to raise their offer price. Since the end of June, JEC shares have rallied 23%.

The current offer is open to all shareholders, but clearly aimed at the biggest of them, including Summit, through September 18.

Little is known about Ofer Saidoff, but younger brother Naty is known to have been born on a kibbutz and left Israel in the 1970s to study at the University of California, Los Angeles. He made his money dealing in diamonds and later in real estate, and now operates through a company called Capital Foresight Investment.

The Saidoffs have never invested in Israel, but Naty gives to pro-Israel organizations. “I think the best way to be a Zionist is to live in Israel, and since I don’t, the second-best way is to be an activist and donate money and do what I do now,” he told The Jewish Journal of Greater Los Angeles in May.

The Saidoffs sought to buy a stake in JEC after its longtime controlling shareholder Eliezer Fishman lost control. They sought to buy Fishman’s 40% stake, which Bank Leumi controlled as collateral, and later tried to buy 40 million shares during a public share offering by JEC led by its CEO, David Zvida.

The Saidoffs’ talks with Leumi failed and Summit eventually bought them, as well as more shares through the public offering.

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