The deal for the sale of control of insurance company The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) to Chinese investment giant Fosun has been signed. The seller, Yitzhak Tshuva's Delek Group Ltd. (TASE: DLEKG) signed a detailed and binding agreement with Fosun.
Fosun is buying 52.31% of Phoenix at a valuation of NIS 3.45 billion, which compares with a market cap on the Tel Aviv Stock exchange of NIS 2.7 billion.
Delek Group will thus receive NIS 1.823 billion on completion of the deal. This amount could change and will continue to bear 4.75% interest until the deal is closed (subject to adjustments for dividend distributions). The consideration will be paid in full at the closure date.
The deal was held up mainly by Fosun's demand for an indemnity from Delek Group against the outcome of an investigation currently underway by the Israel Securities Authority into investment house Excellence Investments Ltd. (TASE: EXCE), which is controlled by Phoenix. Delek Group is believed to have wanted as smooth a deal as possible, without exposure to what might happen at Excellence and Phoenix in the distant future.
Another unresolved matter was the need to come to terms with Phoenix's employees, who unionized under the Histadrut (General Federation of Labor in Israel). There was also the question of the role of Phoenix CEO Eyal Lapidot. Insurance industry sources say that Fosun is examining the possibility of keeping Lapidot in the group but in another role, and also of dividing his compensation between Phoenix and Fosun. However, the latest regulatory directives on senior executive compensation in financial institutions complicated matters.
Delek Group CEO Asaf (Assi) Bartfeld said, "This is an important strategic deal for the group and its investors that continues our focus on energy and on gas and oil exploration. The deal will bring the group NIS 1.8 billion cash. The various moves we have carried out in the past twelve months, including successful sales of companies to the tune of over NIS 6 billion, boosting the group's cash by over NIS 4 billion, not including the Phoenix deal, and rescheduling of the group's long-term debt, give the group exceptional financial strength and resilience, and an excellent launching pad for its plans and the execution of a strategic investment in the international energy market that will be synergetic with and complementary to the group's current activity."
Published by Globes [online], Israel business news - www.globes-online.com - on June 21, 2015
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