The Salkind brothers, who entered Discount Investment Corporation at the beginning of the month, are pushing for significant streamlining at the group. Gil Kotler, CEO of Property & Building Corp. Ltd., will serve as Cohen’s deputy at both of the companies. The group is considering minimizing its pyramid via a corporate merger of shares between layer companies.
07:57 , June 22, 2021
Folding the pyramid: Discount Investment Corporation (DIC) is preparing to merge headquarters with its subsidiary (63.2%), Property & Building Corp. Ltd. The move, which will result in consolidation of officers at the headquarters, is expected to save the group NIS 15-20 million per year. Pushing for this move are the Salkind brothers, who recently received permission to purchase Discount Investment Corporation shares and are interested in implementing significant streamlining at the group. At Discount Investment Corporation, additional streamlining processes are being considered, with the option of merging between companies in the group, in order to minimize the layers in the companies’ pyramid, which currently has three layers.
Read more from Calcalist:
• Probable: Tzachi Nachmias does not intend to pursue bidding for Discount Investment Corporation
• What caused Elsztain to resign from the position of Chair of Property & Building Corp. Ltd.?
• Elsztain is trying to also appoint Doron Cohen as CEO of Property & Building Corp. Ltd.
Back in December, a streamlining process was performed at Discount Investment Corporation, after IDB began to pursue liquidation and stopped participating in Discount Investment Corporation’s expenses. As part of the streamlining, over 30% of the headquarter expenses at Discount Investment Corporation were cut down, which included termination of employees. As part of the merger between the companies, Doron Cohen, CEO of Discount Investment Corporation, will gain power and will be appointed, parallel to his position as CEO of the group, as CEO of Discount Investment Corporation as well. Cohen is also the Chair of Cellcom and Chair of Mehadrin, while Gil Kotler, who is currently the CEO of Property & Building Corp. Ltd., will become Cohen’s number two, both at Property & Building Corp. Ltd. and at Discount Investment Corporation.
Cohen was already on his way out and announced his intention of resigning in March, but within just a month, after holding conversations with directors, he decided to stay. Mega-Or, headed by Tzachi Nachmias, and Elco, controlled by the Salkind brothers, hold 29.9% of Discount Investment Corporation’s shares, respectively, after purchasing them in the debt settlement from the debenture holders of IDB.
During the period when Nochi Dankner was the controlling shareholder, and subsequently during the period of Eduardo Elsztain, IDB, which included Discount Investment Corporation, recorded high administrative and general expenses due to an inflated headquarters at both of the companies. This caused annual expenses of NIS 20-30 million for administrative and general expenses at each of the companies. One of the objectives of the new buyers, which also include Rami Levy (10.8%) is to minimize these expenses.
At the beginning of the month, the Ministry of Communications granted Elco a permit to hold the cellular company Cellcom, which is controlled by Discount Investment Corporation (46%), thereby paving the way for Elco, controlled by Mike and Danny Salkind (65.5%) to approve the purchase of Discount Investment Corporation shares. A few days ago, Mikey Salkind was appointed as a director of Discount Investment Corporation and according to sources close to him, he intends to be active in the company’s operations. Along with the influence that the Salkind brothers are expected to have at Discount Investment Corporation, Calcalist exposed yesterday that Amit Ze’ev, CEO of Dor Alon, announced that he will be resigning at the end of the year from his position after seven years. Calcalist discovered that Ze’ev is the leading candidate for management of the food division of Electra Consumer, controlled by the Salkind brothers. At the end of May, Electra Consumer completed the purchase of control (50.5%) of the Yeinot Bitan supermarket chain based on a value of NIS 400 million - and it intends to also add to its operations the American convenience store chain Seven Eleven, as a large division of food commerce.
Discount Investment Corporation completed the first quarter of 2021 - the first year that it has operated without a nucleus of control - with a profit of NIS 93 million. The parallel quarter was completed by Discount Investment Corporation, which was controlled by Eduardo Elsztain as part of IDB until November 2020, with a loss of NIS 198 million; it ended 2020 with a loss of NIS 555 million.
The primary improvement between the quarters stemmed from the outcomes of Property & Building Corp. Ltd., which contributed NIS 89 million to the profit, in contrast with a loss of NIS 99 million in the parallel quarter. Furthermore, Property & Building Corp. Ltd. recorded a net profit of NIS 120 million in the quarter, in contrast with a loss of NIS 144 million in the parallel quarter, thanks to an increase in the markets and debenture repayments, which created financing income of NIS 15 million, in contrast with financing expenses of NIS 80 million during the parallel period, and thanks to positive revaluation of assets of NIS 9 million, in contrast with negative revaluation of NIS 122 million.
The primary contribution of Property & Building Corp. Ltd. was thanks to Gev-Yam, the holding of which increased, and with it, its part of the profits of Gev-Yam increased, multiplying its part in the profits of the associate companies 4.5 times, to NIS 69 million. A dividend distributed by Gev-Yam earned it NIS 78 million, leading to an increase of close to 5% in the EBITDA.