Dan bus co to sell 50% stake this month
14 November 2019 - globes
The Value Base investment house and a group of senior managers are planning a TASE IPO for Dan.
The deal for the acquisition of up to half of the shares in the Dan bus company by a local group of investors is making progress, and will probably be signed by the end of this month.
Dan's board of directors convened yesterday to discuss the matter, and will meet again in the coming days to approve the deal. A local consortium composed of several large investment institutions and private investors will buy 40% of Dan's shares for NIS 480 million, reflecting a NIS 1.2 billion value for the transportation, real estate, and infrastructure company. The consortium members will be given an option to buy more shares, thereby increasing their stake in Dan to 50%.
Before the deal takes place, Dan is expected to acquire the 10% stake of a minority shareholder in the company - Pinhas Rutenberg, grandson and namesake of Israel Electric Corporation founder Pinhas Rutenberg - for NIS 120-130 million.
The deal to acquire shares in Dan was initiated and formulated by the Value Base investment house through mergers and acquisitions CEO Yair Ephrati and Europe Israel, owned by former Israel Railways CEO Opher Linchevski, former Mekorot Water Company CEO Shimon Ben-Hamo, and former Israel Broadcasting Authority director general Barry Bar-Zion. They will constitute the consortium's management company, and will serve on Dan's board of directors.
A TASE IPO within two or three years
As far as is known, the consortium plans to speed up the streamlining now taking place at Dan and the process of upgrading its real estate. Within two or three years of closing the deal, an IPO on the Tel Aviv Stock Exchange (TASE) is planned for company. The consortium's bid for the shares was substantially higher than the competing bids submitted by Moti Ben-Moshe, the Fortissimo Capital Fund, and the Weil brothers, who own Hartuv Cement.
Dan Transportation was founded in 1945. According to the company's figures, its activity currently focuses on operating buses in the greater Tel Aviv region, where it carries over 14 million passengers a month (640,000 each weekday). Its services are provided in 22 local authorities containing an aggregate 2.5 million people. The company had 1,300 buses as of the end of 2015.
For decades, Dan was a cooperative owned by its employees, then became a limited company in 2002, "in order to adapt the organization to the changing trends in public transportation, based on the desire to streamline and become one of the leading companies in services provided to the public." Dan's CEO is Ofer Zilbiger and its chairman is Shmuel Rafaeli. The company reportedly has 2,600 employees.
In addition to its transportation activity, Dan owns numerous properties, several of which formerly served the company as garages, service centers, parking lots, and other uses for its buses. These properties have great potential for increasing their value if they are rezoned. As part of its real estate activity in recent years, Dan developed several residential, commercial, and income-producing real estate projects.
For example, Dan is promoting the LYFE project in partnership with the Ashtrom group in the BBC business center in Bnei Brak in the vicinity of the Ayalon shopping mall, where it is building two office towers at the junction of Ben Gurion Street and Sheshet Hayamim Street on a lot formerly used as a parking lot for buses. Dan is also becoming a prominent player in the infrastructure sector, after making large investments in desalination and sewage purification.
Dan also holds 16% of the capital in TASE-listed company Electreon Wireless, which is developing smart road technology "designed to facilitate traffic of vehicles along the road using wireless energy transmission." Electreon's current market cap is NIS 750 million. Dan first became a partner in Electreon in late 2017 with an investment of several million shekels. The current market value of this stake is NIS 120 million.