Discount Rallies as Koor Merger to Boost Cash: Tel Aviv MoverSharon Wrobel
Discount Investment Corp. soared to a 16-month high on investor speculation the merger with Koor Industries Ltd., which holds a stake in Credit Suisse Group AG, will improve the company’s cash position.
The shares of Discount jumped 5.1 percent to 20.10 shekels, the highest since April 2012, at the close in Tel Aviv. The yield on the company’s 1.48 billion shekels ($419 million) of 4.95 percent notes due December 2025 fell 33 basis points to 6.88 percent. Koor Industries Ltd., in which Discount owns a 67 percent stake, advanced 6.4 percent to 65.40 shekels, the highest since July 2011, as volume was six times the three-month daily average.
Discount will buy the outstanding shares of Koor at a 3.8 percent premium to their value on Aug. 8 and make it closely held, according to a statement today. Koor said yesterday it will advance the sale of its 1.95 percent stake in Credit Suisse, which it values at 2.1 billion shekels net. The shares of Switzerland’s second-largest bank jumped 71 percent in the past 12 months.
“Discount merging with Koor will improve the company’s liquidity position as will the proceeds of the Credit Suisse shares sale,” said Sharon Naveh, head of institutional and international sales at Migdal Capital Markets Ltd. in Tel Aviv.
Koor, which posted a profit in the second quarter after a loss in the year-earlier period, reported a gain of 75 million shekels on its Credit Suisse shares during the same period. The holding company, with interests also in technology, defense and agrochemicals, had 1.75 billion shekels in cash as of June 30. Discount raised 224 million shekels from a bond sale in July to improve its cash position as controlling holder IDB Development Corp. is mired in debt-restructuring talks. Moody’s Midroog in June cut the rating on Discount’s debt to Baa2 from Baa1, citing “weak liquidity.”