<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
SCHEDULE 13D
(Rule 13d - 101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
(AMENDMENT NO. 13)
PEC ISRAEL ECONOMIC CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK ($1.00 PAR VALUE PER SHARE)
- --------------------------------------------------------------------------------
(Title of Class of Securities)
705098-10-1
- --------------------------------------------------------------------------------
(CUSIP Number)
JAMES I. EDELSON, 511 FIFTH AVENUE, NEW YORK, N.Y. 10017 (212) 551-8881
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
SEPTEMBER 7, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Page 1 of 20 pages
<PAGE>
SCHEDULE 13D
- ---------------------- ------------------
CUSIP No. 705098-10-1 Page 2 of 20 pages
- ---------------------- ------------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
IDB Development Corporation Ltd.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 14,937,792
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
14,937,792
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,937,792
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.35%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ---------------------- ------------------
CUSIP No. 705098-10-1 Page 3 of 20 pages
- ---------------------- ------------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
IDB Holding Corporation Ltd.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 14,937,792
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
14,937,792
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,937,792
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.35%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ---------------------- ------------------
CUSIP No. 705098-10-1 Page 4 of 20 pages
- ---------------------- ------------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Raphael Recanati
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) /X/
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 14,937,792
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
14,937,792
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,937,792
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.35%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ---------------------- ------------------
CUSIP No. 705098-10-1 Page 5 of 20 pages
- ---------------------- ------------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Elaine Recanati
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 14,937,792
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
14,937,792
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,937,792
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.35%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ---------------------- ------------------
CUSIP No. 705098-10-1 Page 6 of 20 pages
- ---------------------- ------------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Leon Recanati
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 14,937,792
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
14,937,792
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,937,792
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.35%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
- ---------------------- ------------------
CUSIP No. 705098-10-1 Page 7 of 20 pages
- ---------------------- ------------------
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Judith Yovel Recanati
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /X/
(b) / /
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(D) OR 2(E) / /
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Israel
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
------------------------------------------------------------
NUMBER OF 8 SHARED VOTING POWER
SHARES
BENEFICIALLY 14,937,792
OWNED BY ------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON WITH -0-
------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
14,937,792
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
14,937,792
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
81.35%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Unless otherwise defined in this Amendment No. 13 to Schedule 13D,
capitalized terms used in this Amendment No. 13 are defined in Amendment No. 10
to this Statement on Schedule 13D, as previously filed.
The following amends Items 2, 3, 4, 6 and 7 of this Statement on
Schedule 13D as previously filed.
Item 2. IDENTITY AND BACKGROUND
The principal address for Mrs. Elaine Recanati is 23 Shalva Street,
Herzliya, Israel.
Mr. Raphael Recanati is Chairman of the Board of IDB Holding and IDB
Development.
The name, citizenship, residence or business address, present
principal occupation, and the name, principal business and address of each
corporation in which such occupation is conducted of each of the executive
officers and directors of IDB Holding and IDB Development are set forth on
Schedules A and B hereof and are incorporated herein by reference.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION,
Item 4. PURPOSE OF THE TRANSACTION and
Item 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
On September 8, 1998, IDB Development delivered to the Issuer a letter
dated September 7, 1998 addressed to the Board of Directors of the Issuer (the
"Proposal Letter") in which IDB Development proposed to acquire all of the
outstanding shares of common stock of the Issuer not already owned by IDB
Development for a cash price of $25.50 per share through a merger of a
wholly-owned subsidiary of IDB Development into the Issuer. As a result of the
proposed merger, the Issuer would become a wholly-owned subsidiary of IDB
Development. In the Proposal Letter, IDB Development stated that it intends
to exchange all of its shares of common stock of the Issuer with its
partially-owned subsidiary, Discount Investment Corporation Ltd. ("DIC"),
for newly issued shares of DIC and has no other intention of selling the
stock of the Issuer.
Page 8 of 20 pages
<PAGE>
IDB Development proposed conditioning completion of the merger upon
(i) approval by the Board of Directors and the shareholders of the Issuer, (ii)
approval of the merger by the Board of Directors and shareholders of IDB
Development and (iii) satisfaction of all applicable regulatory and governmental
requirements in Israel and certain other conditions customarily contained in
transactions of this type.
Financing for the merger would be provided by loans totaling $87.3
million to the Issuer or a merger-subsidiary company (a fully-owned subsidiary
of IDB Development or DIC, as the case may be) from IDB Development, DIC or
any combination thereof, but IDB Development stated that the merger is not
conditioned upon the financing.
IDB Development expects that the merger would occur before the end of
the first quarter of 1999. Upon completion of the merger, the Issuer would seek
to cause its shares of common stock to be delisted from trading on the New York
Stock Exchange and to be deregistered under the Securities Exchange Act of 1934,
as amended.
Each of the Issuer and DIC hold similar, though not identical,
portfolios of equity interests in various public and private companies,
predominantly companies located in Israel or related to Israel. The Issuer and
a wholly-owned subsidiary of DIC are parties to a Business Opportunities
Agreement dated as of November 30, 1993, as amended, pursuant to which each of
the Issuer and DIC offer the other equal participation in business
opportunities that become available to either of them, which is the principal
reason why each of them have similar portfolios of equity interests.
IDB Development stated that the existing corporate structure, under
which similar equity portfolios are held by two separate public companies
(the Issuer and DIC) which are subject to different laws (United States and
Israel) and have fiduciary duties to different shareholders results in a
complex corporate organization.
After the merger and transfer of common stock of the Issuer from IDB
Development to DIC, if it occurs, IDB Development believes that the Issuer would
realize savings and advantages, including (i) streamlined management and
avoidance of duplication
Page 9 of 20 pages
<PAGE>
of efforts in participating in the management of corporations in which both the
Issuer and DIC have ownership interests, (ii) removal of restrictions on the
Issuer's business resulting from the Order the Issuer received from the United
States Securities and Exchange Commission that determined that the Issuer is not
an investment company within the meaning of the Investment Company Act of 1940,
as amended, and (iii) substantial savings of time, expense and energy resulting
from the elimination of proxy statements, annual and quarterly reports and
compliance with United States securities laws for public companies.
IDB Development anticipates that the Board of Directors of the Issuer
will appoint a special committee composed of directors who are not affiliated
with IDB Development or DIC to consider the proposal and that this committee
may engage independent financial advisors and legal counsel to assist in its
deliberations.
Item 7. MATERIAL TO BE FILED AS EXHIBITS
Schedules A and B Name, citizenship, business address, present
principal occupation and employer of executive
officers and directors of IDB Holding and IDB
Development.
Exhibit 1 Proposal letter dated September 7, 1998 from IDB
Development addressed to the Board of Directors of
the Issuer.
Page 10 of 20 pages
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
the undersigned certify that the information set forth in this Amendment No. 13
is true, complete and correct.
Date: September 8, 1998 IDB DEVELOPMENT CORPORATION LTD.
IDB HOLDING CORPORATION LTD.
RAPHAEL RECANATI
ELAINE RECANATI
LEON RECANATI
JUDITH YOVEL RECANATI
By: PEC ISRAEL ECONOMIC CORPORATION
By: /s/ James I. Edelson
---------------------------------
James I. Edelson, Executive Vice President of PEC
Israel Economic Corporation on behalf of IDB
Development Corporation Ltd., IDB Holding
Corporation Ltd. and Raphael Recanati pursuant to
agreements annexed as exhibits to Amendment No. 4
to the Schedule 13D, on behalf of Leon Recanati
and Judith Yovel Recanati pursuant to agreements
annexed as exhibits to Amendment No. 7 to the
Schedule 13D and on behalf of Elaine Recanati
pursuant to an agreement annexed as exhibit 1 to
Amendment No. 12 to the Schedule 13D.
Page 11 of 20 pages
<PAGE>
Schedule A
(Information provided as of September 7, 1998 in response
to Items 2 through 6 of Schedule 13D)
Executive Officers, Directors and Persons Controlling
IDB Holding Corporation Ltd. (1)
("IDBH")
The Tower, 3 Daniel Frisch Street, Tel Aviv, Israel
(citizenship the same as country of residence unless otherwise noted)
Principal
Name and Address Position Occupation
- ---------------- -------- ----------
Raphael Recanati Chairman of the Chairman of the Board
The Tower Board of IDBH, President of
3 Daniel Frisch Street Finmar Equities Co.
Tel Aviv, Israel (Shipping and Finance)(2)
Arie Carasso Director Joint Managing Director
26 Rival Street of Moise Carasso Sons
Tel Aviv, Israel Ltd. (3)
Haym Carasso Director Joint Managing Director
26 Rival Street of Moise Carasso Sons
Tel Aviv, Israel Ltd.
Eliahu Cohen Chairman of the Joint Managing Director
The Tower Executive of IDB Development (4)
3 Daniel Frisch Street Committee
Tel Aviv, Israel
William M. Davidson Director Chief Executive Officer
2300 Harmon Road of Guardian Industries
Auburn Hills, Michigan Corporation
Gideon Dover Director Director of Companies
4 Uri Street
Tel Aviv, Israel
Page 12 of 20 pages
<PAGE>
Principal
Name and Address Position Occupation
- ---------------- -------- ----------
Yair Hamburger Director Chairman and Managing
29 Derech Haganim Director of
Kfar Shmaryahu, Israel Harel Hamishmar
Investments Ltd.
Robert J. Hurst Director Vice Chairman of Goldman,
85 Broad Street Sachs & Co., Investment
New York, New York Bankers
Dalia Lev Director Joint Managing Director
The Tower of IDB Development
3 Daniel Frisch Street
Tel Aviv, Israel
Hermann Merkin Director Member of the New York
415 Madison Avenue Stock Exchange, Inc.
New York, New York and the American Stock
Exchange, Inc. (5)
Raphael Molho Director Director of Companies (6)
22 Ibn Gvirol Street
Jerusalem, Israel
Lenny Recanati Director Senior Manager of
14 Beth Hashoeva Lane Discount Investment
Tel Aviv, Israel Corporation Ltd.
Leon Recanati Vice Chairman Vice Chairman and Joint
The Tower and Joint Managing Director of IDBH
3 Daniel Frisch Street Managing Director and Chairman of the Board of
Tel Aviv, Israel Clal (Israel) Ltd. (7)
Oudi Recanati Vice Chairman Vice Chairman and Joint
The Tower and Joint Managing Director of IDBH
3 Daniel Frisch Street Managing Director and Chairman of the Board of
Tel Aviv, Israel Discount Investment Corporation
Ltd. and the Issuer (8)
Page 13 of 20 pages
<PAGE>
Principal
Name and Address Position Occupation
- ---------------- -------- ----------
Meir Rosenne Director Lawyer
14 Aluf Simhony Street
Jerusalem, Israel
Dov Tadmor Director Managing Director of
14 Beth Hashoeva Lane Discount Investment
Tel Aviv, Israel Corporation Ltd. (9)
Israel Zang Director Dean, Faculty of
10 Kisufim Street Management, Tel Aviv
Tel Aviv, Israel University
Elaine Recanati Housewife
23 Shalva Street
Herzliya, Israel
(citizen of the United
States)
Judith Yovel Recanati Housewife
64 Kaplan Street
Herzliya, Israel
Rina Cohen Comptroller Comptroller of IDBH (10)
The Tower
3 Daniel Frisch Street
Tel Aviv, Israel
Arthur Caplan* Secretary Secretary of IDBH (11)
The Tower
3 Daniel Frisch Street
Tel Aviv, Israel
James I. Edelson U.S. Resident Executive Vice President,
511 Fifth Avenue Secretary Secretary and General
New York, New York Counsel of the Issuer
(12)
Page 14 of 20 pages
<PAGE>
(1) As of September 7, 1998, IDB Holding Corporation Ltd., an Israeli
corporation located at The Tower, 3 Daniel Frisch Street, Tel Aviv, Israel,
owned approximately 71.0% of the outstanding shares of IDB Development
Corporation Ltd. As of such date, companies controlled by Raphael
Recanati, Elaine Recanati, Leon Recanati and Judith Yovel Recanati held in
the aggregate approximately 52.61% of the voting power and equity of IDB
Holding Corporation Ltd.
(2) Mr. Raphael Recanati is Chairman of the Board of IDB Development.
(3) Mr. Arie Carasso is a Director of IDB Development.
(4) Mr. Cohen is a Director of the Issuer.
(5) Mr. Merkin is a Director of the Issuer. Mr. Merkin holds 5,000 shares of
common stock of the Issuer.
(6) Mr. Molho is a Director of IDB Development.
(7) Mr. Leon Recanati is Vice Chairman of IDB Development.
(8) Mr. Oudi Recanati is Vice Chairman of IDB Development.
(9) Mr. Tadmor is a Director of IDB Development.
(10) Mrs. Cohen is Comptroller of IDB Development.
(11) Mr. Caplan is Secretary of IDB Development.
(12) Mr. Edelson holds 2,000 shares of common stock of the Issuer.
* Mr. Caplan is a dual citizen of Israel and Great Britain.
Page 15 of 20 pages
<PAGE>
Based on information provided to the Reporting Persons, except as
previously disclosed in Item 2 to this Schedule 13D, as amended, none of the
persons listed above has been convicted, or is subject to a judgment, decree or
final order, in any of the legal proceedings enumerated in Items 2(d) and 2(e)
of Schedule 13D.
Page 16 of 20 pages
<PAGE>
Schedule B
(Information provided as of September 7, 1998 in response
to Items 2 through 6 of Schedule 13D)
Executive Officers and Directors of IDB Development Corporation Ltd.
who are not Executive Officers or Directors of IDBH
Address is: The Tower, 3 Daniel Frisch Street, Tel Aviv, Israel
(citizenship is Israel)
Name and Address Position Principal Occupation
- ---------------- -------- --------------------
Abraham Ben Joseph Director Director of Companies
87 Haim Levanon Street
Ramat Aviv
Tel Aviv, Israel
Avishay Braverman Director President of Ben Gurion
11 Jericho Street University of the Negev
Beer Sheva, Israel
Michael Levi Director President, Nilit, Ltd.
Textile Fashion Ctr.
2 Kaufman Street
Tel Aviv, Israel
David Leviatan Director Director of Companies
18 Mendele Street
Herzliya, Israel
Based on information provided to the Reporting Persons, none of the persons
listed above has been convicted, or is subject to a judgment, decree or final
order, in any of the legal proceedings enumerated in Items 2(d) and 2(e) of
Schedule 13D.
Page 17 of 20 pages
<PAGE>
IDB DEVELOPMENT CORPORATION LTD. EXHIBIT 1
"The Tower", 3 DANIEL FRISCH ST., TEL-AVIV 64731
TELEFAX: (03) 6952069 TELEPHONE: (03) 6966766
September 7, 1998
Board of Directors of PEC Israel Economic Corporation
511 Fifth Avenue, 10th Floor
New York, New York 10017
Gentlemen:
IDB Development Corporation Ltd. ("IDB Development") hereby proposes
to acquire all of the outstanding shares of common stock of PEC Israel Economic
Corporation ("PEC") not already owned by IDB Development for a cash price of
$25.50 per share through a merger of a wholly-owned subsidiary of IDB
Development into PEC. As a result of the proposed merger, as described above,
PEC would become a wholly-owned subsidiary of IDB Development. IDB Development
intends to exchange all of its shares of common stock of PEC with its
partially-owned subsidiary, Discount Investment Corporation Ltd. ("DIC"),
for newly issued shares of DIC. In the event IDB Development completes the
transfer to DIC of all of its shares of common stock of PEC prior to the
completion of the merger, IDB Development will assign to DIC all of its
rights and obligations in connection with the merger, including any rights
under this offer and in connection thereto. In such case, PEC would become
a wholly-owned subsidiary of DIC.
Completion of the merger would be conditioned upon (i) the approval by
the Board of Directors and the shareholders of PEC, (ii) approval of the merger
by the Board of Directors and shareholders of IDB Development, and (iii)
satisfaction of all applicable regulatory and governmental requirements in
Israel, and certain other conditions customarily contained in transactions of
this type.
Financing for the merger would be provided by loans to PEC or a
merger-subsidiary company (a fully-owned subsidiary of IDB Development or DIC,
as the case may be) from IDB Development, DIC or any combination thereof. Our
proposal is not conditioned on financing.
IDB Development expects that the merger would occur
Page 18 of 20 pages
<PAGE>
IDB DEVELOPMENT CORPORATION LTD.
before the end of the first quarter of 1999. Upon completion of the merger, PEC
would seek to cause its shares of common stock to be delisted from trading on
the New York Stock Exchange and to be deregistered under the Securities Exchange
Act of 1934, as amended.
IDB Development believes that this proposal is fair and will benefit
the public shareholders of PEC. The all cash price of $25.50 per share to be
paid in the merger represents an 11.8% premium over the closing price on
September 4, 1998 of $22.8125 per share and exceeds the highest price at
which the common shares of PEC have traded on the New York Stock Exchange
for the two and one half year period prior to the date of this letter.
PEC and DIC, both subsidiaries of IDBD, hold similar, though not
identical, portfolios of equity interests in various public and private
companies, predominantly companies located in Israel or related to Israel. PEC
was established in 1926, in order to enable U.S. investors to invest in Israel.
Today, Israeli companies have ready-access to the U.S. capital markets. The
existing corporate structure, under which similar equity portfolios are held by
two separate public companies (PEC and DIC) which are subject to different laws
(U.S. and Israel) and have fiduciary duties to different shareholders, results
in a complex corporate organization.
After the merger and transfer of common stock of PEC from IDB
Development to DIC, if it occurs, PEC would realize savings and advantages,
including (i) streamlined management and avoidance of duplication of efforts in
participating in the management of corporations in which both PEC and DIC have
ownership interests, (ii) removal of restrictions on PEC's business resulting
from the Order PEC received from the United States Securities and Exchange
Commission that determined that PEC is not an investment company within the
meaning of the Investment Company Act of 1940, as amended, and (iii) substantial
savings of time, expense and energy resulting from the elimination of proxy
statements, annual and quarterly reports and compliance with United States
securities laws for public companies.
IDB Development desires to proceed on an expedited basis and urges the
Board of Directors of PEC to act as quickly
Page 19 of 20 pages
<PAGE>
IDB DEVELOPMENT CORPORATION LTD.
as possible in considering the proposal. IDB Development anticipates that the
Board would consider appointment of a special committee composed of directors
who are not affiliated with IDB Development or DIC to consider the proposal and
that such committee would be authorized to engage independent financial
advisors and legal counsel to assist it in its deliberations. IDB Development
has engaged BT Wolfensohn as its financial advisor and invites the special
committee's representatives to contact its advisors to discuss this proposal at
the special committee's earliest convenience.
Please be advised that IDB Development has no intention of selling its
holdings of PEC stock, otherwise than in connection with the possible
transaction with DIC referred to above.
IDB Development has been advised that it must promptly file an
amendment to the Statement on Schedule 13D with respect to PEC, which will
disclose the substance of this letter. Accordingly, PEC should consider making
its own public announcement relating to this matter.
IDB Development reserves the right to amend or withdraw this proposal
at its sole discretion at any time.
Sincerely yours,
IDB Development Corporation Ltd.
By: /s/ ELIAHU COHEN
--------------------------------
Name: Eliahu Cohen
Title: Joint Managing Director
By: /s/ DALIA LEV
--------------------------------
Name: Dalia Lev
Title: Joint Managing Director
Page 20 of 20 pages
