Mivtach Shamir Holdings Ltd. (TASE:MISH), a veteran shareholder in Gilat Satellite Networks Ltd. (Nasdaq: GILT; TASE: GILT), has exploited the weakness in Gilat's share price to increase its stake in the company. An SEC filing reveals that Mivtach Shamir currently holds nearly 4 million Gilat shares, representing 8.9% of the total.
In a previous filing, at the end of March, Mivtach Shamir held 5.2% of Gilat. It has thus bought some 1.7 million shares since then, paying an estimated $5.5 million. Mivtach Shamir's current holding in Gilat is worth $13.8 million. On Friday, Gilat's share price on Nasdaq rose, and it has put on some 17% so far this week on the Tel Aviv Stock Exchange, apparently because of the vote of confidence by Mivtach Shamir.
In 2008, Mivtach Shamir, controlled and run by Meir Shamir, led a consortium of Israeli and US investors that sought to buy Gilat outright in a $475 million deal, more than three times the current market cap. The deal broke down, and in a compromise agreement the buyer group paid Gilat compensation of $20 million, of which Mivtach Shamir's share was $5.5 million. Mivtach Shamir remained a minority shareholder in Gilat, as it had been beforehand.
The largest shareholder in Gilat is currently Ishay Davidi's FIMI fund, which holds 33.7% of the company. Gilat, managed by Dov Baharav, produces and sells civilian and military telecommunications equipment, focusing mainly on satellite technology. In recent years, it has repeatedly disappointed investors. It cut its annual guidance, and expects lower revenue and EBITDA than last year. Last week, Gilat reported a $12 million contract in China. Up to last Friday, the company had lost 25.3% of its value on Nasdaq this year. Its current market cap is $154 million.
Mivtach Shamir itself reported its third quarter results this week. The company, which six months ago completed the sale of its holding in food company Tnuva, currently engages in investment in real estate and technology. Thanks to the Tnuva sale, it made a net profit in the first nine months of 2015 of NIS 462 million, compared with NIS 47.2 million in the corresponding period of 2014. Mivtach Shamir declared a dividend of NIS 4.5 per share, NIS 47.3 million in total, payable on January 3. Meir Shamir will receive NIS 17 million of the dividend.
Excellence believes that the market has "fined" Mivtach Shamir excessively for the uncertainty over what it will do with its cash. Excellence Nessuah analyst Michal Alshech mentions that the acquisition of Israel Military Industries is a possibility, but says that it will take time until there is certainty over that. Excellence Nessuah rates Mivtach Shamir a "Buy", with a price target of NIS 96, 20% above market.
Published by Globes [online], Israel business news - www.globes-online.com - on December 1, 2015
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