<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 11, 1998
-------------------------------
PEC Israel Economic Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Maine 1-8707 13-1143528
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
511 Fifth Avenue, New York, New York 10017
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 687-2400
-----------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. OTHER EVENTS AND
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
On December 11, 1998, PEC Israel Economic Corporation (the "Company")
issued the press release, which is exhibit 1 hereto, reporting that the Special
Committee of the Company's Board of Directors and the Company's Board of
Directors recommended acceptance by the Company's shareholders of a revised
offer from IDB Development Corporation Ltd. ("IDBD"), the owner of approximately
81.35% of the outstanding shares of the Company, to acquire all of the
outstanding shares of common stock of the Company not owned by IDBD (the "Public
Shares") for a cash price of $30.00.
On December 14, 1998, the Company issued the press release, which is
exhibit 2 hereto, reporting that on December 11, 1998 two shareholders of the
Company filed a purported class action against the Company and its directors
alleging that IDBD's revised offer to purchase the Public Shares for a cash
price of $30.00 per share is unfair.
On December 15, 1998, the Company issued the press release, which is
exhibit 3 hereto, reporting that the Company had signed a definitive merger
agreement for the acquisition by IDBD of the Public Shares for a cash price of
$30.00 per share.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PEC ISRAEL ECONOMIC CORPORATION
-------------------------------
(Registrant)
By:/s/ JAMES I. EDELSON
----------------------------
Date: December 21, 1998 James I. Edelson,
Executive Vice President
3
<PAGE>
EXHIBIT 1
FOR RELEASE IMMEDIATELY
PEC ISRAEL ECONOMIC CORPORATION
REPORTS THAT THE SPECIAL COMMITTEE OF ITS
BOARD OF DIRECTORS AND ITS BOARD OF DIRECTORS
RECOMMEND ACCEPTANCE OF REVISED
OFFER FROM ITS PARENT CORPORATION TO ACQUIRE FOR CASH ALL
OUTSTANDING SHARES AT A PRICE OF $30.00 PER SHARE
NEW YORK, December 11, 1998 . . . . PEC Israel Economic Corporation
(NYSE:IEC) today reported that the Special Committee of its Board of Directors
and its Board of Directors recommended acceptance by its shareholders of a
revised proposal from its parent corporation, IDB Development Corporation Ltd.
("IDB Development"), the owner of approximately 81.35% of the outstanding shares
of common stock of PEC, to acquire all the outstanding shares of PEC not already
owned by IDB Development for a cash price of $30.00 per share. The
recommendation is subject to the execution of a definitive merger agreement
satisfactory to the Special Committee. Completion of the proposed acquisition
would be subject to the approval of the shareholders of PEC.
IDB Development has also agreed to exchange all of its shares of
common stock of PEC with its 54.37% owned subsidiary, Discount Investment
Corporation Ltd. ("DIC"), for newly issued shares of DIC. The exchange may take
place before all the outstanding shares of PEC are acquired.
The revised proposal is subject to the approval of the Audit
Committees of the Boards of Directors of IDB Development and DIC. As a result
of the proposed acquisition of all the public shares of PEC, PEC would become a
wholly-owned subsidiary of IDB Development or DIC and its shares would be
delisted from trading on the New York Stock Exchange.
(more)
<PAGE>
In making their recommendation, the Special Committee and the Board of
Directors considered, among other factors, the opinion of the Special
Committee's financial advisor, Merrill Lynch International.
PEC organizes, acquires interests in, finances and participates in the
management of companies, predominantly companies which are located in Israel or
are Israel-related. PEC's website address is http://www.irin.com/iec.
- - - -
<PAGE>
EXHIBIT 2
FOR RELEASE IMMEDIATELY
PEC ISRAEL ECONOMIC CORPORATION
REPORTS THE FILING OF A SHAREHOLDER ACTION
ALLEGING THAT PARENT CORPORATION'S OFFER TO PURCHASE
OUTSTANDING SHARES OF PEC HELD BY THE PUBLIC FOR
A CASH PRICE OF $30.00 PER SHARE IS UNFAIR
New York, December 14, 1998 . . . . PEC Israel Economic Corporation
(NYSE:IEC) today reported that on December 11, 1998 two shareholders of PEC
filed a purported class action in New York State Supreme Court against PEC and
its directors. The plaintiffs allege that the offer of PEC's parent
corporation, IDB Development Corporation Ltd. ("IDBD"), to purchase all
outstanding shares of PEC common stock not already owned by IDBD for a cash
price of $30 per share is unfair and substantially below the fair or inherent
value of PEC and that the defendant PEC directors breached their fiduciary
duties in recommending acceptance of the offer by PEC's shareholders. PEC
believes that the plaintiffs' allegations are without merit and intends to
vigorously contest the action.
PEC organizes, acquires interests in, finances and participates in the
management of companies, predominantly companies which are located in Israel or
are Israel-related. PEC's website address is http://www.irin.com/iec.
- - - -
<PAGE>
EXHIBIT 3
FOR RELEASE IMMEDIATELY
PEC ISRAEL ECONOMIC CORPORATION
REPORTS SIGNING OF A MERGER AGREEMENT
FOR THE ACQUISITION FOR CASH OF ALL
OUTSTANDING SHARES OF PEC AT A
PRICE OF $30.00 PER SHARE
New York, December 15, 1998 . . . . PEC Israel Economic Corporation
(NYSE:IEC) today reported that it entered into a merger agreement with IDB
Development Corporation Ltd. ("IDBD"), the owner of approximately 81.35% of the
outstanding shares of common stock of PEC, and PEC Acquisition Corporation
("Acquisition Corp."), a wholly-owned subsidiary of IDBD, that provides for
IDBD's acquisition of all the outstanding shares of PEC not already owned by
IDBD for a cash price of $30.00 per share through the merger of Acquisition
Corp. into PEC.
The merger agreement has been authorized by the Boards of Directors of
PEC and Acquisition Corp. and by the Audit Committee of the Board of Directors
of IDBD. Completion of the merger is subject to the approval of the
shareholders of PEC. It is expected that the merger will take place by the end
of the first quarter of 1999. As a result of the merger, the shares of common
stock of PEC would be delisted from trading on the New York Stock Exchange.
PEC organizes, acquires interests in, finances and participates in the
management of companies, predominantly companies which are located in Israel or
are Israel-related. PEC's website address is http://www.irin.com/iec.
- - - -
