Oct.05, 2012 | 1:24 AM–The premium over market value paid to acquire a controlling block of shares of publicly traded companies in Israel has averaged an exorbitant 27%.
But that margin is likely to contract substantially in the next two years, predicts the accounting and consulting firm BDO Ziv Haft as the benefits accruing to controlling shareholders become increasingly constricted.
The premiums can be expected to drop to a range of 10% to 15% or even lower, Yigal Toledano, a partner at the firm, said at a conference held by the Tel Aviv Stock Exchange on the effect of changes in the capital market on company valuation.
A survey conducted by BDO found that control premiums paid on transactions in Israel were similar to those paid in countries such as Venezuela and Colombia.
In contrast, premiums in advanced European countries tended to be in the range of 8% to 10% while averaging just 2% in the United States. And while Italy stood out with premiums averaging a whopping 37%, in Japan acquisition of control actually entailed a discount of 4% rather than payment of any premium.
Toledano attributed the odd situation in Japan to its culture, saying shareholders holding controlling stakes in companies there are intimidated by the responsibility this involves, and therefore price the privilege of wielding such power negatively.
In Israel, however, tycoons have until now anticipated the financial and business benefits that could be gained beyond those accruing to other shareholders…Read More>>