G City deal breaks down

Chaim Katzman and Tzachi Abu offer conflicting reasons for the deal's demise, but insist that the break-up was friendly.

A month after it was signed, the deal for the sale of control in income producing real estate company G City (TASE: GCT) (formerly Gazit Globe) to Ari Real Estate (TASE: ARIN) and Ispro (TASE: ISPR) has broken down. Now, Chaim Katzman, who controls G City, and Tzachi Abu, who controls Ari Real Estate, have presented contradictory versions of the reasons for the split, which both sides insist was friendly.

In an initial comment on the development this morning, Katzman, who controls G City through Norstar Holdings (TASE: NSTR), said, "Two months ago, Norstar announced that it was examining the sale of some of its stake in order to reduce leverage and to continue to hold shares in G City. A month ago, we signed a good agreement with a worthy and respected partner who in time would become the controlling shareholder. A basic condition was that Ari Real Estate should be the buyer of the shares, after we examined the company’s financial strength.

"Two weeks ago, we read a report that they had brought in a partner. To put it mildly, the financial profile of the new partner was dramatically lower than that of Ari. Yesterday, we received the partnership agreement, and it tuned out that there were understandings with the partners to act vis-à-vis us in a way that diverged from the agreements with us, such as the possibility of switching the controlling shareholder, including Ari Real Estate’s complete exit from the agreement."

For his part, Abu has a different explanation for the way things turned out. "As soon as Katzman realized that my declarations were apparently going to come about, that I would gain control and that I intended to do something with it - his whole team takes salaries in the tens of millions of shekels for no reason - in my opinion he became alarmed and decided that he wanted out," Abu said talking to "Globes".

"He evidently felt pressured, and when you’re under pressure you look for excuses," he continued. "I understood that he was going to war, and that you can’t go into a deal of this size when there’s a war. So I tried to make peace, and I said to him, this is the program, and I don’t intend to force myself on you, or on anyone else. Take it or leave it. Had the agreement not included the option to acquire control in the first place, I assure you that we would have taken our money and continued to control the company and laugh at us," Abu said.

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Abu said that he first realized that a problem had arisen only a week after the agreement with Ispro was signed, when Katzman sent him an indirect message via the press. "He never said it to me in a conversation between us. Last week, when I was on vacation, he sent me a newspaper report that there was tension between us. A few days after we reported the deal I sat with him for a heart to heart talk into the night, and he never said a word to me."

Looking ahead, both sides are giving out the message that they intend to put the failed deal behind them. "This morning I already received proposals from two other interested parties," Katzman said in a call with investors. "We have decided to reopen the process, and we assume that other buyers will be found. We are carrying out other deals for sales in Europe until we reduce the leverage to the desired target of 50%. We also understand that there’s a need to cut management and general expenses, and we’re acting accordingly.

"I wish to say that I have nothing against the other side; these things happen. Tzachi Abu is a young man and an excellent businessman, and I truly wish them success and all good things, and I wish Ispro well too. We shall continue to work, and hope that we’ll be successful," Katzman concluded.

Abu also broadcast a similar message. "I wish Katzman and G City success. I’m not angry and bear no ill will," he said. On the plans of Ari Real Estate, which recently raised money for the purposes of the G City deal, Abu promised that he would do "good business." Last month, Ari Real Estate raised NIS 255 million from financial institutions to finance the various components of the deal.

G City's share price is currently down 3.81%, and is back where it was before the deal with Ari Real Estate was announced, when it rose about 20%. Ari Real Estate is up by more than 4%.

Published by Globes, Israel business news - en.globes.co.il - on August 4, 2026.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.