Alrov to Delist as Alfred Akirov Faces 86 Million NIS Class Action
Alfred Akirov is privatizing Alrov Properties and Lodgings, delisting its shares from the Tel Aviv Stock Exchange. Simultaneously, he faces a class action lawsuit from minority shareholders claiming undervaluation, with damages potentially reaching 86.9 million NIS.
Businessman Alfred Akirov is set to complete the privatization of Alrov Properties and Lodgings this week, ending its years of trading on the Tel Aviv Stock Exchange.
According to an official company announcement, Alrov shares will be delisted on Wednesday, November 4, following the successful completion of a tender offer for public shares. However, just as Akirov achieves his goal, he faces a legal battle that could potentially cost tens of millions of shekels.
The buyout process began in late September when Akirov announced his intention to acquire the remaining public stake in Alrov. The tender offer priced shares at 322.41 NIS each, reflecting a company valuation of approximately 6.64 billion NIS. Total consideration for the roughly 2.45 million shares stood at around 788 million NIS.
The offer succeeded after meeting the statutory acceptance threshold, allowing for a mandatory squeeze-out of minority shareholders who opposed the buyout. Trading in Alrov shares was halted on October 29, and the mandatory acquisition proceeds will be transferred to stock exchange clearinghouse members ahead of the delisting.
Legal Challenge Over Share Valuation
Behind the transaction lies a valuation dispute that could cost Akirov dearly. Walter Team, an institutional entity holding Alrov shares that opposed the tender offer, filed a motion to approve a class action lawsuit against Akirov and his private companies. The plaintiffs argue that minority shareholders were forced to part with their shares at a price below fair value.
According to the legal filing, Alrov's equity attributable to shareholders stood at approximately 7.38 billion NIS at the end of June, whereas the tender offer reflected a valuation lower by some 738 million NIS. An economic expert opinion attached to the motion estimates the fair value of an Alrov share at 357.94 NIS, compared to the 322.41 NIS actually paid—an 11% gap.
The lawsuit estimates compensation for squeezed-out shareholders at approximately 11.72 million NIS. However, under an alternative legal track based on disclosure obligations, the claim could expand to cover all shareholders included in the offer, pushing total potential damages to about 86.9 million NIS.
A key issue raised in the motion is the early commitment by Mor Investment House to accept the tender offer. Mor, holding roughly half of the public float, agreed in advance. Plaintiffs argue that Mor acquired its holdings at a significantly lower price, meaning its consent does not necessarily validate fairness for other minority holders.
Strategic Motives and Clal Insurance
Driving Alrov's privatization is a broader strategic objective involving Clal Insurance Enterprises Holdings. Alrov is a major shareholder in Clal, holding a stake of approximately 14%. Akirov has spent years seeking regulatory approval for a controlling permit in the insurance giant. Privatizing Alrov could facilitate corporate restructuring and separate Clal shares from Alrov's marketable debt, easing regulatory hurdles.
Despite the equity delisting, Alrov will not disappear entirely from the exchange: its series E, F, and G bonds will continue to trade normally, and the company remains a reporting entity.
As Akirov pursues his long-held ambition to control Clal Insurance, he must now also navigate the legal challenges brought by minority shareholders, with the class action motion pending judicial review.
