Shlomo Eliahu, controlling shareholder in Migdal Insurance and Financial Holdings Ltd (TASE: MGDL), the parent company of Migdal Insurance Company, is stepping down as chairperson of the company, and will be replaced by former justice of the Supreme Court Hanan Melcer. The Migdal board is due to convene tomorrow to approve the change. Eliahu himself will continue to serve as a director of the company; the question arises whether he will be able to continue as a director of Migdal Insurance Company as well.
Eliahu, 86, holds 64.28% of Migdal Insurance and Financial Holdings through Eliahu Issues, which he set up in order to finance his takeover of the company. Ever since Eliahu bought control of Migdal from Italian insurance giant Assicurazioni Generali in 2012, a series of CEO and chairpersons have left it, including Eliahu's son Ofer, who lasted the longest as CEO of Migdal Insurance Company — four years.
The veteran businessman began at Migdal as a messenger boy, and was later promoted to the role of switchboard operator, until he was dismissed. In 1959, he became an insurance agent, and in 1966 founded insurance company Eliahu, though which he accumulated the capital that enabled him to sign the deal for buying control of Migdal Insurance and Financial Holdings in 2012.
He completed the move in October 2012, when he paid Generali NIS 3.54 billion for 69% of the shares in Migdal Insurance and Financial Holdings, a price that implied a valuation of NIS 5.1 billion. The share price in the deal, NIS 4.86, represented a 20% premium over the market price at the time.
Today, with Migdal Insurance and Financial Holdings's market price at NIS 5.52 (giving it a market cap of NIS 5.82 billion) Eliahu, through Eliahu Issues, holds shares in the company worth NIS 3.74 billion.
To that should be added dividends totaling some NIS 1 billion that Eliahu has received from Migdal Insurance and Financial Holdings over the years, the last one in October last year. (Migdal Insurance Company cannot distribute dividends in the near future, as it is below the capital ratio that the Solvency II rules require in order for a dividend payment to be allowed.) Along the way, Eliahu has realized a small proportion of his shares in Migdal, amounting to some NIS 28 million.
Melcer stepped down from the Supreme Court last April after serving on it for 14 years. He was the first judge to be appointed to the Supreme Court from the private sector; until his appointment in 2007, he ran a law firm. In his parting speech from the Supreme Court he called for preservation of the independence of the judicial branch of the state.
Melcer, 70, was born in Tel Aviv, the son of Holocaust survivors. His father, the late Adv. Yosef Melcer, was one of the people who was saved from the Holocaust by Oskar Schindler ("Schindler's List"). His mother, the late Yocheved Melcer, survived the Auschwitz concentration camp. Yosef and Yocheved Melcer reached Israel after the war. Hanan Melcer studied at the Gymnasia Herzliya high school in Tel Aviv and at Tel Aviv University. In 1977 he founded a law firm which, as mentioned, he ran until his appointment to the Supreme Court in 2007.