Because of the requirements of the Business Concentration Law, Zadik Bino is examining the sale of his stake in Paz Oil Company Ltd. (TASE:PZOL). The law forbids the holding of substantial stakes in both a financial and a non-financial entity, and Bino also controls First International Bank of Israel (TASE: FTIN) with a holding of 48.3%, worth NIS 2.68 billion. Under the new law, he is obliged to sell his holdings in either Paz or the bank within six months.
Sources inform "Globes" that Bino recently contacted a number of investment banks and instructed them to put forward names of possible buyers for his stake and that of his partner, the Liberman family of Australia, totaling 43.8%. Paz is Israel's largest fuels company, and controls Ashdod Oil Refinery.
It is believed that Bino is asking somewhere around the market price for his shares in Paz, that is, about NIS 2.4 billion, which gives Paz a market cap of NIS 5.44 billion. As far as is known, Bino has not signed an exclusive agreement with any investment bank to advise on the sale, but has asked several banks to suggest buyers. If a deal goes ahead, the bank in question will receive a high commission.
A response on behalf of Zadik Bino states, "Since the Concentration Law was passed, our office has received many approaches from investment banks offering their services to promote the sale of Paz. It has been made clear to all of them that no decision has yet been made which of the businesses will be offered for sale and how such a sale will be carried out. Your inquiry is therefore irrelevant."
Market sources estimate that the main potential interest in Paz is from private equity funds. An Israeli entity could buy Paz, but, given the restrictions of the Concentration Law, the chances of such a buyer being found are low. Another possibility is that a foreign energy company could buy the company, but such a deal would require regulatory approval, and most international energy companies are active in Arab countries, which is liable to place obstacles in the way of approval. The fact that Paz controls Ashdod Oil Refinery makes it the owner of strategic asset, which means a sale to foreign investors is unlikely to be allowed.
Published by Globes [online], Israel business news - www.globes-online.com - on March 1, 2014
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