Taking Stock / Buy and Sell, Cut and Run

1. Salkind: Buying, abroad

Elco Holdings this week announced its intention to invest up to $30 million in buying 75 percent of a consumer electronics company in China. Its announcement came as little surprise. Over the last five years, Elco has turned itself into a multinational by buying foreign companies. It has all but halted its investment in Israel.

The increasing tendency among Israeli companies and tycoons to invest overseas is usually attributed to Israel's over-regulation. That is balderdash, though - much of the regulation they grouse about was designed to restrain monopolies, to curb the power of the biggest players and to increase competition.

The real reason Israel's companies are seeking their fortunes abroad is that the government's macroeconomic policy has reduced Israel's economic growth to about the lowest in the world, even though the population is one of the fastest-growing.

Gershon Salkind himself, Elco's owner, always says: Business needs growth. Elco cannot achieve the kind of growth it needs for its further development in Israel. Nor can most of Israel's major companies. That is why they are looking abroad.

2. Granot: Cutting, ouch

The First International Bank of Israel, the media reported yesterday, wants the courts to appoint a receiver for Gad Zeevi's holdings in Ace Build and Buy, and in Malam Systems.

The only question that came to mind when reading the article was, "What, no receiver has been appointed yet?"

Like many of the tycoons who borrowed huge amounts in recent years, Gad Zeevi has defaulted. But Israel's banks are merciful, tender like mothers to dewy-eyed babes in arms, when dealing with their biggest clients. They send a letter and then another letter, they talk and talk and talk. And talk.

Often enough, the customer and the bank are in exactly the same boat, and neither wants to rock it or to acknowledge the reality. The bank wants to reduce its provision for doubtful debt, in order to lavish bonuses and dividends on its owners, while the customer wants to drag matters out, hoping an economic upturn will arrive and save his bacon.

Yet the vibe at the banks has been changing. Inspired by the Bank of Israel's Supervisor of Banks, the banks are starting to look reality in the face. Having done that, the moment comes when they have to deal with it, too, and start turning aggressive toward defaulting clients.

The supervisor aside, another cause of the sudden savagery is management changes at the banks. A new broom does not feel bound by the promises of his predecessor. There's a new sheriff in town, the new bank manager or credit czar tells the customer in arrears. That's what Shai Talmon has done at Bank Hapoalim, Giora Ofer at Israel Discount Bank and David Granot at First International Bank of Israel. Bank Leumi is the only one in which the managers forced to deal with the here and now, are the ones who granted the credit in the first place.

3. Gelbard: Running?

Jacob Gelbard met last Wednesday with Shlomo Nehama, the chairman of Bank Hapoalim.

What did they talk about? The cellular market, perchance? Third-generation networks? The monsters of Pele-Phone's Escape brand?

Or the possibility that Gelbard would abandon Pele-Phone Communications, less than two years after taking over, and only half a year after the noisy launch of the new Escape brand name? Leaving the cellular operator struggling with heavy losses and lagging behind its rivals?

Could they have discussed whether Gelbard might take the open CEO post at Israel's biggest bank, a job that would certainly be a lot more more plummy and pleasant?

4. Meiri: Leaving on a high

Michal Meiri, Tnuva's marketing manager, announced her resignation this week after seven years at the company. Unlike most of the people who stepped down in the last year, she is leaving at the peak, not in disgrace. She led the dairy company during its transformation into one of the strongest brands in Israel, peaking with its launch of Yoplait yogurt.

Although the Yoplait launch and the wars with arch-rival Strauss look like the most fascinating events in Tnuva's history, actually the biggest step of all is scheduled for half a year hence.

Faithful to his explicit promise, its CEO, Arik Raichman, will be completing the distribution of the dairy cooperative's shares among the kibbutzim and moshavim that make the foodstuffs. He will be transforming Tnuva from a cooperative, whose financials are not in the public domain, into a public company that publishes quarterly reports. Then a new era will begin at Tnuva, an era of profits, not only branding and market share.

5. Trumped

Two years after coming to Israel, buying control over Gmul Investment Company as their "platform" for major investments in Israel, Jules and Eddie Trump, the multimillionaire siblings from America, are selling.

There are many possible interpretations for the exit of the Trumps, who are major donors and are devoted to Israel. But their reasons for shedding Gmul are probably simple enough. They bought it for top dollar, using only 20 percent of their own equity, they are dissatisfied with the company's management and they decided that increasing their exposure to Israel and Gmul is not in their best interest. So they cut and ran.