Delek Group (TASE: DLEKG), controlled by Yitzhak Tshuva, yesterday signed a memorandum of understanding for the sale of its 30.1% holdings in The Phoenix Holdings Ltd. (TASE: PHOE1; PHOE5) to foreign investment funds Centerbridge Partners and Gallatin Point Capital for NIS 1.6 billion.
The value of Phoenix in the deal is equal to the insurance company's market cap, which has risen in recent years. As a result, Delek Group is getting a decent price for Phoenix, although the value for the deal is 16% lower than Phoenix's equity at the end of the third quarter of 2018.
The heads of Centerbridge and its partner in the deal met earlier this week with Capital Market, Insurance, and Savings Authority Supervisor Moshe Bareket, and then signed the memorandum of understanding to acquire control of the Phoenix group, including the Excellence Investment House and other companies, such as Gama Management and Clearing and the AD 120 chain of retirement centers. The agreement gives the funds 60 days of exclusivity to complete due diligence and submit a regular request to the Capital Market, Insurance, and Savings Authority for transfer of a controlling interest in Phoenix. Regulatory approval for the acquisition is far from certain.
Centerbridge is being advised in the deal by former Mizrahi Bank (TASE: MZTF) CEO, former Bank Hapoalim (TASE: POLI), and former Accountant General Eli Yones. The fund recently considered acquiring Psagot Investment House, but eventually decided to drop the idea. On the other hand, Delek Group signed five agreements with potential buyers in recent years, none of which resulted in a deal: Chinese-American company Sirius, Chinese concern Fosun Group, US family Kushner, US company AmTrust, and Chinese concern Yango.
Delek Group hopes that it will manage to sell Phoenix and rid itself of the controlling interest, thereby putting itself in compliance with the Promotion of Competition and Reduction of Concentration Law, which obligates Delek Group to sell its holdings in Phoenix by the end of 2019. Delek Group is restructuring in order to focus on energy business, and therefore wants to sell Phoenix, regardless of the law.
Published by Globes, Israel business news - en.globes.co.il - on February 27, 2019
© Copyright of Globes Publisher Itonut (1983) Ltd. 2019