Egged opts to sell to Keystone Fund, despite lower bid

In a surprise move, Egged CEO Avi Friedman has sent a letter to the bus company’s 1,300 shareholders informing them that the board of directors has decided to proceed with a sale to the Keystone Fund, even though it is only submitted the second highest bid in the tender.

Keystone Fund’s bid gives Egged a company valuation of NIS 4.77 billion, compared with the valuation of NIS 5.6 billion in the bid from the consortium of Carasso Motors, Migdal Insurance and Financial Holdings, and Aluma Infrastructure Fund. Friedman told shareholders that the higher bid was riskier because of the consortium’s refusal to make a 15% down payment.

Following the consortium’s refusal to pay a down payment of NIS 420 million, representing 15% of the value of the company in the bid, Friedman wrote to shareholders that the consortium, “has not met the substantive conditions for taking part in the process, and there was in the bid major risk in its ability to meet the financial commitments for completing the deal.”

Friedman continued in the letter that the board of directors had therefore decided to proceed with the Keystone Fund bid of NIS 2.8 billion for a 60% holding in Egged. He added that the Keystone Fund would be required to pay 15% of the sum to Egged by May 8 and the fund had agreed to this condition.

Published by Globes, Israel business news – en.globes.co.il – on April 14, 2022.

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