Ministers Agree (23/12/04) to Cede Control of Company to Knafaim, Ltd.
The privatization of El Al Israel Airlines, Ltd., has been completed. Last week, in a ceremony attended by the Minister of Finance, Benjamin Netanyahu, and the Minister of Transport, Meir Sheetrit, the state-as holder of a "special share" in El Al-agreed that Knafaim-Arkia Holdings, Ltd., may acquire a stake in El Al shares that will allow it to control the company.
In June 2003, in an innovative action, the Government Companies Authority issued El Al on the Tel Aviv Stock Exchange. It was the first time that 100 percent of shares in a government-owned corporation were offered to the public on the exchange at once. Thus, every citizen was allowed to acquire shares-either in the offering or on the exchange-and to belong to a future controlling core group, i.e., there was no direct sale of controlling equity to investors. Every individual and entity that acquired El Al shares or warrants gained from the struggle for control of the company and earned a "control premium." This method allowed market forces to determine the identity of the controlling principal.
During the eighteen months since the issue, there has been lively trade in El Al shares on the exchange and the share price has risen due to aggregation of shares, the company's good performance, and the exercise of warrants.
The Minister of Finance, Benjamin Netanyahu, said at the ceremony, "For twenty years there has been talk about privatizing El Al and now the process has been completed. This privatization serves the entire public. Under private management, El Al will be better run to serve the Israeli public, its customers. One successful privatization has been completed and domestic phone monopoly Bezeq, Israel Discount Bank, Bank Leumi and the Oil Refineries are on the way."
The Minister of Transport, Meir Sheetrit, noted, "I was a partner in the privatization of El Al as a member of the Ministerial Privatization Committee and as Minister of Transport. The privatization of El Al is an important landmark in the privatization of government-owned corporations; the final goal is for no companies to remain in government hands."
The director of the Government Companies Authority, Eyal Gabbay, said, "The privatization of El Al has ended successfully. The issue of the company and the fascinating struggle for control of the shares that developed on the exchange helped to wake up the capital market and enhanced El Al's performance. We are pleased that the company has done well over the past year and we wish it a promising future in private hands." Gabbay added, "The success of the privatization, to the dismay of all the doomsayers who said eulogies after the issue and warned the public not to buy shares, is good for the Israeli economy and good for El Al."
