The Salkind Brothers, who joined DIC this month, are undertaking efforts to streamline efficiencies in the Group. Gil Cutler, CEO of PBC, will serve as Cohen’s Deputy CEO in both companies. The Group is considering reducing the pyramid structure through a business merger of shares between the layered companies.
07:57 , 22.06.21
The pyramid is folding in. Discount Investment Corporation (DIC) is preparing to merge its headquarters with its subsidiary (63.2%), Property and Building Corporation (PBC). The move, which results in the merger of staff positions, is expected to save the Group 15-20 million NIS a year. The Salkind brothers are pushing for the merger and recently received a permit to purchase the DIC shares. Their main interest is to streamline and optimize the Group’s operations. DIC is considering further streamlining measures, including the possibility of merging Group companies. The present aim to reduce the strata in the companies’ pyramid, which currently has three layers.
Read more in Calcalist:
• It seems that Tzahi Nachmias has no intention to bid on DIC
• What caused Elstein to resign as chairman of PBC?
• Elstein is working to appoint Doron Cohen as CEO of PBC
DIC has been undertaking streamlining processes as early as last December, after IDB Holding was liquefied and ceased sharing DIC’s expenses. As part of the streamlining efforts, more that 30% of DIC’s headquarters expenses were cut, which also included employee layoffs. As part of the companies’ merger, Doron Cohen, DIC’s CEO, will see his role strengthened. Furthermore, along with his position as Group CEO, Cohen will also be appointed as CEO of PBC. Cohen also serves as chairman of Cellcom and Mehadrin. Gil Cutler, who currently serves as PBC’s CEO, will become Cohen’s Deputy CEO both at PBC and DIC.
Cohen was already on his way out and announced in March his intention to retire. However, only a month later, he decided to stay following talks with directors. Mega Or Holdings, headed by Tzachi Nachmias, and Elco Holdings, which is under the control of the Salkind brothers, each hold 29.9% of DIC’s shares following their purchase after a debt settlement with IDB bondholders.
During Nokhi Dankner’s tenure as the controlling interest holder, as well as during the tenure of Eduardo Elstein, the IDB Group (in which DIC is part of) recorded large administrative and general expenses. These expenses were due to the bloated headquarters in both companies. This resulted in annual expenses of 20-30 million NIS for management and other general expenses in each of the companies. One of the goals of the new buyers, including Rami Levy (10.8%), is to reduce these expenses.
At the beginning of the month, the Ministry of Communications granted Elco Holdings a holding license in the telecommunications company Cellcom, which is controlled (46%) by DIC. This paved the way for Elco Holdings, which is controlled (65.5%) by Michael and Daniel Salkind to authorize the purchase of DIC shares. A few days ago, Michael Salkind was appointed as director of DIC. According to sources close to him, he intends to take an active role in the company’s operations. At the same time, with the Salkind brothers’ expected impact on DIC, it was reported to Calcalist yesterday that Amit Ze’ev, CEO of Dor Alon, announced his intention to retire at the end of this year, following his 7 years in the position. Calcalist has learned that Ze’ev is the leading candidate to manage the Food Division of Electra Consumer Products, which is controlled by the Salkind brothers. At the end of May, Electra Consumer Products completed its controlling purchase (50.5%) in the supermarket chain Bitan Wines, at a value of 400 million NIS. The company intends to add the American convenience store chain 7-Eleven to its operations and to a large division of food commerce and trade.
DIC ended the first quarter of 2021, the first year of its operations without a controlling shareholder group, with a profit of 93 million NIS. DIC ended the same quarter in the previous year, which was controlled until November 2020 by Eduardo Elstein as part of the IDB Group, with a loss of 198 million NIS. The company ended 2020 with a loss of 555 million NIS.
The improvements over the quarters can be attributed to PBC, which contributed 89 million NIS to profits, compared with a loss of 99 million NIS in the corresponding quarter of the previous year. Additionally, PBC recorded a net profit of 120 million NIS in the quarter, compared to a loss of 144 million NIS in the previous year’s quarter. This is due to the increase in market and bond repayments, which generated financing income of 15 million NIS, compared to financing expenses of 80 million NIS in the same period a year ago. This can also be attributed to a positive asset revaluation of 9 million NIS, compared to a negative revaluation of 122 million NIS.
Most of PBC’s contribution was due to Gav Yam, whose holdings increased with a corresponding increase in the share Gav Yam’s profits. A 4.5 increase in the profits of affiliated companies amounted to 69 million NIS. A dividend distributed by Gav Yam entered 78 million NIS, leading to an increate of nearly 5% in the EBITDA.