A History of Struggles: Is Haim Katzman Really Ready to Part with Control of the Company He Founded?
From Ormat, through A. Dori, to Norstar and G City, the veteran businessman has experienced several confrontations and struggles over the last two decades, from which he often emerged battered. All this while the value of his life's work, the real estate company G City, continues to shrink. Following the collapse of the deal to sell control of the company to Tzahi Abu, the market wonders how much Katzman really wants to sell and whether he will find a new buyer for his businesses.
A young and ambitious entrepreneur tries to take over the global real estate operations of one of the capital market's veterans; but just moments before the deal is completed, an "old fox" pulls a rabbit out of his hat and scares off the young challenger, who leaves empty-handed. Meanwhile, this leaves onlookers wondering if this wasn't one trick too many, which will cost him dearly.
This is a question that quite a few investors in Tel Aviv must have asked themselves last week, when they saw how businessman Haim Katzman (76) chose to withdraw from a deal that was supposed to lead to the transfer of control of his life's work — the real estate company G City — into the hands of businessman Tzahi Abu (owner of the Ari Nadlan company).
"He did not intend to stand by the agreement, but was looking for a partner who would put a billion shekels into the company, and that he would continue to control it with his people, and it would be impossible to fire them," the frustrated Abu summarized. — "I realized that it would be impossible to do anything, so I decided to give up."
This is not the first time that a deal to sell control of G City (formerly Gazit-Globe) has hit a snag, and the current explosion with Abu joins a series of struggles and confrontations in which Katzman has been involved over the last two decades, against those who were or tried to be his partners.
Debt Burden and Stock Decline
"In high-tech, it's lose everything or be rich. With us, in real estate, the sense of comfort is built over time and makes selling unnecessary," Katzman said in a past interview with Globes regarding the exit of his sister, Dalia Pershker, one of the founders of the technology company "The Modern Dimension," which was sold in the late 90s in what was the largest exit in Israel until then.
And indeed, Katzman took his time. Even today, about 35 years after he began acquiring assets in Florida on the way to establishing a global real estate company that currently operates in 9 countries, he continues to lead it as CEO. This is despite several takeover attempts that G City has experienced in recent years and a significant erosion in the value of the company he founded.
G City shares, which Katzman once hoped to turn into "the people's stock," have lost almost 70% of their value compared to the peak levels of 2020, on the eve of the COVID-19 crisis. The company is currently trading at a value of less than 2 billion shekels, far behind the industry's leaders on the Tel Aviv Stock Exchange. What weighs on the stock is mainly the huge debt, which currently exceeds 20 billion shekels, even after realizing assets worth over 7 billion shekels in recent years.
A History of Failed Deals
The explosion of the deal with Abu may remind one of a similar event four years ago, when Israel Canada, controlled by Barak Rosen and Asi Tuchmair, attempted to seize control of Norstar (G City's parent company). Katzman employed a "poison pill" strategy, distributing shares as dividends, which eventually led to the takeover's failure amidst rising interest rates. Today, Israel Canada's loss on that investment is estimated at about a quarter of a billion shekels.
Similar struggles have accompanied Katzman before. About two decades ago, he led an aggressive acquisition move of shares in the geothermal energy company Ormat, which resulted in heavy losses for Norstar (estimated at over 600 million shekels). Later, in 2007, G City purchased 38% of the construction company A. Dori, which also ended in a conflict with the founder and a subsequent sale to Amos Luzon for a pittance — only 10 million shekels. Today, Luzon Group trades at a market value of over 2 billion shekels, more than that of G City as a whole.
Future Outlook
Despite his reputation as a "troublemaker," Katzman's circle insists he was genuinely ready to sell. Katzman himself previously stated: "Ego is just another tool in the game, and in the end, the real role is to maximize value for the shareholders."
In about two months, Katzman is expected to vacate the G City CEO chair in favor of Keren Khalifa. His circle notes that he values her highly and is fully prepared to pass the reins, marking a significant step in the company's transformation.
