Gmul Investments (TASE:GMUL) yesterday confirmed a report in "Globes" two weeks ago that its controlling shareholders, Amnon Barzilai and Eyal Yona, are about to separate. Yona and Barzilai have disagreed about how to manage the company for a long time, and have been on the verge of separation before.
Gmul said that Yona was carrying out a preliminary examination on the possibility of selling to the Egged bus cooperative his rights in Marlaz - Shore Area Construction Property and Holding, which indirectly controls Gmul. Gmul has a market cap of $80 million.
Despite the improvement in Gmul's business circumstances over the past year, thanks to the stock market boom, no one is apparently eager to buy Marlaz, because of the company's huge debt to Bank Hapoalim (LSE: BKHD; TASE: POLI), taken when Marlaz acquired Gmul.
Egged, which has been mentioned as a candidate for taking over Yona's partnership with Barzilai, has close business relations with Gmul and its controlling shareholders, which may be an obstacle for approving the deal. On one hand, Egged is a partner in the new Tel Aviv Central Bus Station, controlled by Marlaz. Egged and the Dan Cooperative Society for Public Transport are the bus station's main tenants. On the other hand, Gmul owns 12% of Nitsba Holdings (TASE: NTBA), the holding company controlled by Egged members and pensioners. Barzilai, who is due to keep his stake in Gmul together with Egged, is also chairman of Nitsba.
In addition, Egged and Gmul are jointly bidding to acquire the controlling interest in Nitsba, after the courts disqualified their win in the previous tender last year. The court sharply criticized Egged managers' conflicts of interests in the deal.
Yona and Barzilai's Marlaz control Gmul through Mediterranean Properties and Investments (MPI). Although Gmul's market cap has doubled over the past year, it is still far less than the $120 million value at which Yona and Barzilai acquired the controlling interest in the company. They bought Eddie and Julius Trump's stake in Gmul in late 2003 by taking over an unsecured loan Bank Hapoalim had extended to the Trumps.
Gmul has over NIS 500 million in cash, which it used to make a number of investments in the past year, mostly in real estate. Managed by Ori Shalev, Gmul has posted a profit of NIS 100 million in the past five quarters, a third of which was in the third quarter of 2004.
Most of the profit came from its investment in Ishay Davidi's First Israel Mezzanine Investors, Tadiran Communications (TASE: TDCM), and Nitsba Holdings, and from the sale of a California real estate project to a group of foreign investors headed by Gmul's previous controlling shareholders.
Gmul recently announced that it would acquire Tnuva's 23-dunam (5.75-acre) lot in north Petah Tikva. An Urban Building Plan (UBP) was recently deposited for the construction of 523 high-density housing units on the site. Gmul will pay $22 million for the land, provided that the UBP is approved.
Published by Globes [online], Israel business news - www.globes.co.il - on January 17, 2005