Elron’s $15 million dividend spurs stock surge as Arieli EL looks to add investor value
Following its takeover, Arieli EL moves to boost investor confidence through dividend distribution despite short-term paper losses.
A month after completing its acquisition of control over Elron, the American investment firm Arieli EL is leading a dividend distribution of $15 million. Following the announcement, Elron's stock surged on the Tel Aviv Stock Exchange.
Arieli purchased 59.14% of Elron’s shares for $53.2 million. During negotiations, the possibility of a dividend distribution from the company’s cash reserves was discussed. Had the previous controlling shareholder, Discount Investments, distributed the dividend before the transaction's completion, the purchase price would have been adjusted accordingly.
Earlier in February 2024, Elron distributed a $61.5 million dividend after the sale of portfolio company Cartriheal, in which Elron held a 30% stake. Cartriheal was sold for $330 million.
The current dividend is being distributed following court approval, as it did not meet the company's profit test. In a press release, Elron stated that this dividend represents 30% of the company’s market value, approximately NIS 195 million.
Despite purchasing Elron at a valuation of $90 million, Arieli is currently facing paper losses, as its holding is now valued at only $31 million.
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Lisya Bahar Manoah, Chairperson of the Board at Elron and Managing Partner at Arieli Family Office, said “Returning value to the company's investors is a priority for us. The board of directors has approved this distribution based on the strong performance of Elron’s portfolio and the company's healthy balance sheet.”
Yaron Elad, CEO of Elron Ventures, added: “Following the completion of the Arieli EL transaction, I’m pleased that the board of directors has decided to distribute a dividend and share our success with our investors. Elron maintains a strong cash position, enabling us to continue investing in both existing and new opportunities. Our robust portfolio of mature companies in the cybersecurity space is ideally positioned at the forefront of a market that demonstrates significant potential for value realization.”
