Delek Group Ltd. (TASE: DLEKG), controlled by Yitzhak Tshuva, has signed a non-binding memorandum of understanding (MOU) with the Fortissimo fund, led by Yuval Cohen, for the sale of 60% of its Delek Infrastructures subsidiary, which holds half of the shares in water desalination company IDE Technologies. The MOU is based on a company value of $206 million for Delek Infrastructures, reflecting a value of $412 million for IDE. At the same time, Delek Infrastructures and the other parties in the MOU will take steps to raise $80-100 million in debt on the capital market, which will be deducted from the value of Delek Infrastructures for purposes of the deal.
When the report was published, Delek Group's share price was up 1% in trading on the Tel Aviv Stock Exchange (TASE).
IDE develops, produces, and operates desalination facilities and advanced water solutions. The company, founded over 50 years ago, has carried over 400 projects in 40 countries, including Israel, India, China, Australia, and Thailand, as well as countries in Europe and North, South and Central America.
Among other things, IDE holds half of the desalination plant in Ashkelon (a desalination capacity of 120 cubic meters a year), half of the desalination plant in Hadera (127 million cubic meters a year, and 51% of the desalination plant in Sorek, and fully owns the desalination plant built in 2015 in Carlsbad, California.
In late 2017, Israel Chemicals (TASE: ICL: NYSE: ICL), then a partner of Delek Group, completed the sale of its 50% stake in IDE for $167 million. The buyers included Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), which now owns 20% of IDE's shares; the advanced training funds of the teachers and kindergarten teachers, (20%); and IDE president and CEO Avshalom Felber (10%).
This is not the first deal between Delek Group and Fortissimo. Several months ago, the fund acquired Gadot Biochemical Industries, which has caused Delek Group heavy losses in recent years, for NIS 40 million. Gadot markets and produces citric acid and citric acid salts used in the food, drugs, and detergents industries, and also markets and sells fructose raw material as a sugar substitute and premium sweetener in the food industry.
Delek Group invested a total of $136 million in Gadot in 2010-2015, including a larger-than-expected investment in building the company's plant, and wrote off value in activity it tried to development in China on which it lost $120 million in 2011-2012.
Published by Globes [online], Israel business news - www.globes-online.com - on August 20, 2018
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