The pending delisting from the Tel Aviv Stock Exchange (TASE) by Mellanox Technologies Ltd. (Nasdaq:MLNX; TASE:MLNX) is just the latest delisting by a dual-listed company in recent years. Companies which have decided that trading on Wall Street is enough, and forewent Tel Aviv, include smart networking solutions developer Radware Ltd. (Nasdaq:RDWR), legacy software modernization solutions developer BluePhoenix Solutions Ltd. (Nasdaq: BPHX), US payment terminals development VeriFone Holdings Inc. (Nasdaq: PAY) (which was dual-listed after acquiring Lipman Engineering), and fleet management solutions developer Pointer Telocation Systems Ltd. (Nasdaq:PNTR).
While we are not talking about a large number of companies which have delisted from the TASE, a study by the TASE Research Department found that 64 companies voluntarily delisted in 2010-12, including six dual-listed companies with an aggregate market cap of NIS 6.5 billion.
However, as the TASE dries up, there is concern that more dual-listed companies will delist from it because it is easier for them to do so than for companies that are listed only on the TASE. A dual-listed company only has to announce its intention to delist, and, after 90 days, it will only be traded on a foreign stock exchange. There is no need for an offer to purchase or any other complicated process.
Israeli companies, which are traded on Nasdaq, the New York Stock Exchange, or the London Stock Exchange, and which meet certain conditions, can also list on the TASE as dual-listed companies, under the Dual Listing Law. Currently, there are over 40 dual-listed companies, including Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), and Perrigo Company (NYSE:PRGO; TASE:PRGO) and mobile carriers Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) and Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR). Dual listings offer companies various incentives to attract companies to list on the TASE, such as filing announcements and financial reports in the same format in Israel and overseas.
Another incentive is the easy procedure for delisting, which is given to companies to persuade them to list on the TASE with the guarantee that, in the worst case, they can regret the decision and delist.
There are claims that tighter regulations have applied in recent years, and that dual-listed companies, along with all TASE-listed companies, must comply with Amendment 20 (Executive Salaries) of the Securities Law (5728-1968), and other laws. The class-action suit against Teva, as a result of which the company began disclosing executive pay, may affect other dual-listed companies, which currently do not disclose this information, and is liable to cause companies to delist from the TASE.
"The obligations of dual-listed companies under the Securities Law have not greatly increased. The difficulty is created by other laws, such as the Companies Law and insurance and provident fund provisions, which have been tightened in recent years," says a capital market source. He says that this is reflected by the few companies which have chosen to dual list in recent years.
The TASE would be happy for more companies to dual list. It has clear interest: this adds companies and boosts trading volumes. But companies should also gain an advantage by increasing the trading volume in their shares. But companies such as Check Point Software Technologies Ltd. (Nasdaq: CHKP), Amdocs Ltd. (NYSE: DOX), and Playtech Cyprus Ltd. (LSE:PTEC) are in no hurry to take advantage of the bargain. LivePerson Inc. (Nasdaq: LPSN); TASE: LPSN), a New York-based software company, which dual-listed two years ago, remains an exception.
Some former dual-listed companies said that they delisted from the TASE because most of the trading in their shares occurred overseas, rather than in Israel. "Since the Dual Listing Law came into effect, some companies are still with us, and others are not for various reasons," TASE chairman Sam Bronfeld told "Globes". "There is a very wide variability in the proportion of trading on TASE compared with New York. If I am not mistaken, trading volumes in the US are much greater," he added. "But that does not matter. The idea is to add to the existing US trading volumes by Israeli investors who might not otherwise be investors at timetables which do not overlap.
"In other words, dual-listing has many advantages from the companies' perspective. It doesn’t mean that half of the turnover should be in Tel Aviv. What's important, and what we've seen over the years, is that dual listing increases trading volumes and liquidity. Trading on the TASE is much cheaper than in New York, and the trading hours are friendlier for Israelis. The advantage is very clear," he said.
Published by Globes [online], Israel business news - www.globes-online.com - on June 30, 2013
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