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Shufersal Gains as Asset Value Seen Unlocked: Tel Aviv Mover

Jan. 6 (Bloomberg) -- Shufersal Ltd. advanced to the highest level in more than a month on bets Israel’s largest supermarket chain would pay out more dividends as it approved a real estate reorganization.

The shares earlier climbed as much as 4.6 percent before advancing 2.3 percent to 11.25 shekels at the 4:30 p.m. close in Tel Aviv, the highest level since Nov. 29. Trading was almost three times the three-month average daily volume. The benchmark TA-25 index advanced 0.5 percent today and is up 2.6 percent this year.

The company said its board has approved a real estate reorganization in the first quarter of 2013 which would see the transfer of most of its assets to a subsidiary. The assets include as many as 68 branches valued at as much as 1.6 billion shekels ($424 million), compared with a book value of 1.1 billion shekels, according to a filing with the Tel-Aviv Stock Exchange today.

“This is a way of uncovering the hidden value of the company’s real estate assets that is higher than their book value,” Gil Dattner, an analyst at Bank Leumi Le-Israel Ltd. in Tel Aviv, said by phone. “This creates capital gains and will enable the company to distribute more dividends.”

The shares of Shufersal tumbled 22 percent in 2012 as protests calling for lower food costs curbed the company’s ability to raise prices, and because competition from low-cost retailers such as Rami Levi Chain Stores Hashikma Marketing 2006 Ltd. increased. Shufersal shares have added 7.6 percent this year compared with Rami Levi’s gain of 7.2 percent.

In September, S&P Maalot lowered Shufersal’s rating to ilA+ from ilAA-, citing “less than satisfactory” liquidity and lower profit margins for 2012 because of competition and the slowing economy. Israel’s economy expanded 3.3 percent in 2012, the Central Bureau of Statistics said Dec. 31. In 2011, the economy grew 4.6 percent and in 2010 by 5 percent.

Discount Investment Corp., which has a 45.48 percent stake in Shufersal, advanced 3.2 percent to 12.42 shekels.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net

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