Shikun & Binui's CEO Steps Down Amidst Acquisition Bid by Leading Shareholder

Shikun & Binui CEO Tamir Cohen has resigned under pressure from controlling shareholder Nati Saidoff, who aims to take a more active role in the company's management. Cohen plans to assemble a consortium to potentially acquire control. Shikun & Binui's stock has experienced a 65% decline since its peak in May 2021, partly due to debt taken on for large projects, including a plot in Tel Aviv for rental housing. The company's leveraged position amid rising interest rates has raised concerns for Saidoff.

Shikun & Binui Holdings Ltd. (TASE: SKBN), the Israeli construction and infrastructure company controlled by Naty Saidoff, has seen a series of challenges that have impacted its financial performance. Recently, the company's CEO, Tamir Cohen, announced his resignation under pressure from Saidoff, who aims to take a more active role in the company's management [1].

Cohen's departure comes as Shikun & Binui grapples with significant losses, primarily driven by its operations in Africa. A halt in a highway project in Ethiopia has resulted in a loss of approximately NIS 98 million [1]. This loss adds to the NIS 135 million loss reported in the third quarter, bringing the total loss to NIS 233 million [1]. These setbacks have resulted in a 5.61% decline in the company's share price, with a market cap of NIS 4.7 billion, a 20% decrease from the end of November [1].

Shikun & Binui's troubles in Africa are not the only issues affecting the company. In November 2023, the company announced that it was discontinuing a 57-kilometer highway project in Ethiopia due to force majeure and the state of emergency in the country [1]. Additionally, the devaluation of the Nigerian naira currency, a significant market for Shikun & Binui, is expected to cause losses of over NIS 250 million [1].

Saidoff's decision to replace Cohen comes at a time when Shikun & Binui is seeking to expand its horizons beyond Israel [2]. In 2019, Saidoff acquired a 47% stake in the company, and his goal was to leverage the company's expertise in construction and development to expand its operations internationally. However, recent events have raised concerns about the company's financial position and its ability to execute on its growth plans.

Shikun & Binui's debt-laden balance sheet and its exposure to volatile currency markets have raised concerns for Saidoff [1]. The company has taken on significant debt to finance large projects, including a plot in Tel Aviv for rental housing [1]. These financial obligations, combined with rising interest rates, have made Shikun & Binui's leveraged position a cause for concern [1].

In conclusion, Shikun & Binui's recent financial losses, driven by its operations in Africa, and the resignation of its CEO, Tamir Cohen, under pressure from controlling shareholder Naty Saidoff, highlight the challenges facing the company. With significant debt, exposure to volatile currency markets, and a changing leadership landscape, Shikun & Binui's future growth prospects remain uncertain.

References:
[1] "Shikun & Binui suffers NIS 233m loss in Q3, 2023 due to African projects disruption." Globes, Israel business news. 11 Feb. 2024. https://en.globes.co.il/en/article-african-projects-cause-shikun-binui-heavy-losses-1001470944
[2] "Shikun and Binui expanding horizons." The Jerusalem Post. 27 Jan. 2020. https://www.jpost.com/special-content/shikun-and-binui-expanding-horizons-698338

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