Bank Leumi (TASE: LUMI) recently formed a consortium of investors to buy the controlling interest in Paz Oil Company Ltd. (TASE:PZOL). The consortium was put together by Avi Ortal, head of the bank's non-financial investment arm Leumi Partners. As far as is known, the members of the consortium are real estate developer Roni Yitzhaki, the Livnat brothers (owners of haulage and infrastructures company Ta'avura), and IIF (the Israel Infrastructure Fund), headed by Yaron Kestenbaum. The consortium will buy 20-25% of Paz, possibly buying 20% with an option on a further 5%, for some NIS 1 billion, valuing Paz at NIS 4 billion. Paz's market cap at this morning opening on the Tel Aviv Stock Exchange was NIS 3.4 billion. The company's share price is currently up nearly 14%.
The consortium wanted to carry out the deal through a private placement of shares rather than through the purchase of shares from the financial institutions, with 7.5% going to each consortium member and Bank Leumi holding 2.5%. This would dilute the financial institutions' holdings in Paz, and so they can be expected to oppose the deal, preferring that Paz should complete the sale of Ashdod Oil Refinery, which is proceeding in parallel, in order to benefit form a large dividend, especially as the oil refinery has occasioned Paz heavy losses in recent months.
The offer by the investor consortium, which was made some time ago, before the oil refinery sale, appears to indicate that the investors see the oil refinery as an asset. At any rate, whether Paz continues to hold the oil refinery or sells it will affect the investment process, since it is considered a strategic asset of the State of Israel, which will entail strict security clearance procedures for the consortium members.
Paz confirmed that it had received several approaches and offers for buying its shares. In the company's notification it stated that these were initial approaches from several different entities, some of them in general terms and some of them more concrete.
"The company's board of directors has not yet discussed the approaches that have been received, and it intends to hold a discussion shortly," Paz said.
If the Leumi Partners consortium does buy the shares, it will become the controlling interest in Paz, since most of the company's shares are held by the large insurance companies and investment houses. Cal Insurance has the largest stake, at 9.93%; Menorah-Mivtachim holds 9.8%; Migdal and Phoenix-Excellence hold 9.7% each; Harel holds 9.04%; Meitav Dash holds 6.76%; and Psagot holds 6.43%.
Published by Globes, Israel business news - en.globes.co.il - on May 9, 2021
© Copyright of Globes Publisher Itonut (1983) Ltd. 2021