Institutional Investors Block Elco Medical Deal with Controlling Shareholder's Daughter

For the second time in less than a year, institutional investors have blocked the relocation plans of the daughter of the controlling shareholder of Elco Medical. The shareholders' meeting of the diagnostics and medical equipment company rejected by an overwhelming majority the proposal from the company, controlled by Moshe Ben-Shaul (58.4%), to enter into an agreement with his daughter, Tamar Galili, and her partner, under which the two would be responsible for distributing the company's medical laboratory management software in the USA. The reason: concerns among institutional investors that the terms of the engagement are more favorable to the family than those the company could obtain with other distributors.

When Ben-Shaul previously attempted to approve the engagement in September, it involved direct employment by an Elco Medical subsidiary with an annual salary of $379,000 to $554,000 each. At that time, 57% of minority shareholders voted against it. This time, the company proposed an engagement through an external company owned by the couple, which would profit from the margin between the sale price of each software license and a payment of at least $35 transferred to Elco Medical. If the sale price exceeds $200, the company would receive a portion of the surplus.

Elco Medical justified the deal by stating that Galili, who served as CEO until October 2024 and is currently a board member, possesses unique skills that could drive success in the American market. However, institutional investors remained unconvinced and voted by an almost absolute majority (99.6%) against the proposal.

Elco Medical's software activity remains negligible and loss-making, yielding revenues of only 2.6 million shekels in 2025 out of 931 million shekels in total annual revenue. In the first quarter of 2026, sales in this segment reached 1.1 million shekels. Galili managed Elco Medical from 2016 until October 2024, leading it to a record market value of 1.9 billion shekels in January 2022. Since then, the stock has fallen by 60%, and net profit dropped from 192 million shekels in 2021 to 39 million shekels by 2024. Today, the company is traded at a value of 557 million shekels, 71% less than its 2022 peak.