Tiv Taam shareholder files class action suit against Gaydamak

Plaintiff Aharon bought shares of Tiv Taam on the day that Gaydamak announced he was purchasing 51% of the chain, which was June 10, and sold his shares again on June 18 at a discount of 16.2%, after Gaydamak withdrew from the deal.

By SHARON WROBEL
June 21, 2007 08:17
1 minute read.

 
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Tiv Taam Holdings minority shareholder Itai Aharon has filed a motion at the Tel Aviv District Court for a class action suit against Arkadi Gaydamak regarding his conduct in the failed Tiv Taam deal, which could cost the Russian tycoon millions of shekels in damages to be paid to investors. In the motion, which was filed by Attorney Amit Manor, Aharon alleged that Gaydamak's behavior and management in the failed deal to buy the non-kosher supermarket chain caused him great economic damage by misleading Tiv Taam shareholders. Plaintiff Aharon bought shares of Tiv Taam on the day that Gaydamak announced he was purchasing 51 percent of the chain, which was June 10, and sold his shares again on June 18 at a discount of 16.2%, after Gaydamak withdrew from the deal. If the motion is approved as a class action, it will apply to anybody who bought shares from June 10 onward. Aharon calculated the damage to him and the other plaintiffs at 16.2% of the price at which they bought shares in Tiv Taam. Aharon initially bought 3,000 Tiv Taam shares worth NIS 20,700 at a rate of 690 points following Gaydamak's announcement to buy a controlling interest in the chain and his intention to upgrade the chain, open new branches and transform it into the third-largest food chain in Israel. On that same day Tiv Taam shares jumped over 40% as the general public bought stock in the company. However, already in the first few days following the deal announcement, Tiv Taam shares tumbled to 475 points, based on changes that Gaydamak planned regarding the chain and rumors about the collapse of the deal resulting from disputes with the Tiv Taam owners. On June 18th, Tiv Taam issued a statement that the agreement with Gaydamak was cancelled, causing Tiv Taam shares to fall even further. At this point, Aharon sold his shares for 430 points at a loss of 16.2% or NIS 3,353 on the investment. Under the terms of the original agreement, Gaydamak would have had to pay the owners of Tiv Taam $20m. for withdrawing from the deal. Under a new agreement reached, it was announced on Monday that Gaydamak would instead buy a 10% stake of Enter Holdings, the parent company of Tiv Taam for NIS 30m., and pay a $2m. cancellation penalty fee.

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