Lev Leviev and Yosef Grunfeld are considering merging their Israeli residential businesses. Sources inform ''Globes'' that Grunfeld's Kardan NV (TASE: KRNV;AEX:KARD) unit Kardan Real Estate Enterprise and Development Ltd. (TASE: KARE) has initiated talks to merge with Leviev's Africa-Israel Investments Ltd. (TASE:AFIL) subsidiary Africa-Israel Residences Ltd. (TASE:AFHS).
Africa-Israel's spokeswoman said in response, "Africa-Israel, as a public company, reports its business activities as required, if and when it has something to report.
Kardan's spokeswoman said in response, "The company continues is continuing to examine a merger with Ashtrom."
In June, Kardan Real Estate announced that it was in talks to merge with Ashtrom Properties Ltd. (TASE:ASPR) unit Ashdar. There has apparently been no progress in the talks since the announcement. If a deal is closed, the merged company would own with partners 12,400 housing units. It would have shareholders' equity of NIS 700 million, NIS 1.8 billion in current liabilities, and a bond debt, mostly Ashdar's, of NIS 560 million.
Kardan, controlled by Grunfeld and Avner Schnur has been suffering from heavy losses by subsidiaries in recent years, due in part to their huge bond debts, which are scheduled for repayment in the coming years. Kardan's share price has fallen 67% in the past 12 months, the share price of Kardan Israel Ltd. (TASE:KRIS), through which it controls Kardan Real Estate, has fallen 75%, and Kardan Real Estate's share price has fallen 24%.
Kardan Real Estate lost NIS 4.8 million in the first quarter of 2012, on top of the NIS 60 million lost in 2010-11, partly due to write-offs on the scandal-ridden Holyland project in Jerusalem.
Africa-Israel Residences earned NIS 194 million on its share of the sale of 204 housing units, held with partners, for NIS 337 million in the first quarter. It posted a net profit of NIS 23.4 million in NIS 320 million in the first half of 2012.
Kardan Real Estate CEO Yoram Keren previously served as Africa-Israel Residences in 1999-2008.
Kardan has a market cap of NIS 182 million and Africa-Israel Residences has a market cap of NIS 467 million.
An attempt by Kardan to sell Kardan Real Estate in 2008 to Yitzhak Tshuva-controlled Delek Real Estate Ltd. (TASE: DLKR) subsidiary Dankner Investments Ltd. fell through.
Published by Globes [online], Israel business news - www.globes-online.com - on August 13, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012