Arkia Weighs Shell Company Merger as Employee Labor Dispute Looms
Arkia owners the Nakash family are weighing a stock exchange shell merger and capital injection, facing employee pushback against a 22 percent stake dilution and a looming labor dispute amid a 60 million USD deficit.
The Nakash family, controlling owners of Arkia Israeli Airlines, is exploring a merger with a Tel Aviv Stock Exchange-listed shell company alongside ongoing efforts to sell the airline. If finalized, the transaction would involve injecting tens of millions of NIS into Arkia through public capital-raising by the shell. Shlomi Fogel, controlling owner of Israel Shipyards and a partner of the Nakash brothers in Ampa Group, may also join the initiative, bringing expertise in corporate restructuring. This strategic review follows opposition from two of the three Nakash brothers, Joe and Rafi—along with their representative Avi Hormero—against a potential buyout deal proposed by the Lerner group, the Varour family, and Avi Alkayam.
Arkia previously advanced merger talks with a shell company, Technoplast Ventures, in December 2022 at a valuation of 150 to 200 million NIS, but negotiations collapsed in August 2023 ahead of a planned signing by the Nakash brothers and shell shareholder Eran Meital. Meanwhile, tensions escalate as a capital injection is expected to dilute the 22 percent stake currently held by employees through the TOT trust. Employees strongly oppose the dilution, deeming it illegal, and are preparing to declare a labor dispute led by union representative Avi Edri. According to industry experts, any disruption to operations could severely damage Arkia, which already suffers from a capital deficit of approximately 60 million USD.
While employees favor the proposed acquisition by the Lerner group, Alkayam, and the Varour family, brothers Joe and Rafi Nakash maintain that no active negotiations are taking place with that consortium, despite brother Avi's prior involvement and consent. A spokesperson for the brothers stated that no talks are currently underway between the three brothers and the Lerner group regarding the sale of Arkia. The Nakash family has previously viewed a merger with competitor Israir as a viable exit, though market observers consider such a deal highly improbable unless the Israel Competition Authority designates Arkia a failing firm. Such a status applies strictly when no other buyers exist even at nominal prices, whereas the Lerner group has formally expressed readiness to acquire the carrier. Furthermore, Arkia points to competitive pressure on the Eilat route, now shared with Israir, newcomer Air Haifa, and El Al Israel Airlines.
