After selling 4.9% of the shares in The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) through Mizrahi Tefahot Bank (TASE:MZTF) and 4.9% more through Bank Hapoalim (TASE: POLI), Delek Group Ltd. (TASE: DLEKG) has now sold another 4.9% packet of shares in the insurance group through Israel Discount Bank (TASE: DSCT) for an immediate payment of NIS 263 million in cash according to Phoenix's market cap. Despite the shares sold, Delek Group still retains a controlling interest in Phoenix.
Delek Group, controlled by Yitzhak Tshuva, has now sold 14.7% of the shares in Phoenix for a total of NIS 772 million within a few days, while retaining the possibility of additional payment if the value of Phoenix rises.
Delek Group, managed by CEO Asaf Bartfeld, has taken good advantage of Phoenix's high value. The company today reported that it had sold shares simultaneously with its swap deal in which three years from now, "at times an in amounts determined in the agreement, an accounting will take place between the company and the banking institution concerning the difference between the sales price of the shares sold to a third party and the value of the shares sold on this accounting date."
The swap agreements with Mizrahi Tefahot Bank and Bank Hapoalim stipulated accounting periods of two years and 21 months, respectively.
This deal will probably be Delek Group's last sales of shares in Phoenix of this kind before selling its remaining shares in a single package to a party seeking to acquire a controlling interest in the insurance company (and willing to pay a control premium), or before deciding to dispose of its controlling interest in Phoenix by selling it on the market.
The three deals in the past week were in effect made possible by the Capital Market Authority's change in the classification of Phoenix, thereby reducing the minimum controlling interest in the company to 30% and allowing Delek Group to sell shares while still keeping a controlling interest. Now that Delek Group's stake in Phoenix has fallen to 31.5% of the latter's share capital, it can now sell only 1.4% more, a fact that will probably prevent another such deal.
The company value for the deal with Discount Bank and Phoenix's market cap is NIS 5.3 billion, much more than the value in the deals signed by Delek Group in recent years for the sale of a controlling interest in Phoenix.
Two months ago, another deal promoted by Delek Group for the sale of its holdings in Phoenix to Sirius expired. Sirius is waiting for the appointment of a new Supervisor of the Capital Markets Authority in the hope that the new appointment will take a different tack than outgoing Supervisor Dorit Salinger, who refused to let the deal go through. A year ago, in a preliminary step towards this deal, Delek Group sold 4.9% of the shares in Phoenix to Sirius for NIS 208 million, which means that Delek Gropu has sold 19.6% of the shares in Phoenix, over a third of its holdings in the company, for NIS 980 million within a year.
Phoenix has been the most successful insurance company in Israel in recent years, increasing its profit and climbing to second place in the sector under the management of CEO Eyal Lapidot. The company posted a NIS 108 million profit in the second quarter, 50% less than in the corresponding quarter last year. Phoenix's profit in the first half of the year was NIS 283 million, 43% less than in the corresponding period in 2017, but these results were still among the best in the sector.
Delek Group is obligated to sell its holdings in Phoenix by the end of 2019 under the Promotion of Competition and Reduction of Concentration Law, but is doing so voluntarily in order to pursue a structural change designed to turn it into an energy group.
Published by Globes [online], Israel business news - www.globes-online.com - on September 5, 2018
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