Less than six months after talks ended between Chinese conglomerate Fosun and Israeli insurer The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) following warning signs from the Israeli regulator, Supervisor of Capital Markets, Insurance and Savings Dorit Salinger, another Chinese investment group is considering buying the company, controlled by Delek Group Ltd. (TASE: DLEKG).
Representatives of the Chinese group met with Israeli regulators this week to advance a potential acquisition of Phoenix - for a figure amounting to 90% of its equity, giving the company a NIS 3.5 billion valuation (representing a 58% premium).
The identity of the Chinese buyer is as yet unknown - it seems the company does not have any local representatives in Israel at this time. Experts believe the company is privately-owned - and not state-owned - and operates in a number of sectors. However, the company does not have any holdings in the insurance and financial arenas, which it likely hopes to enter on the back of the Phoenix acquisition - which also owns investment house Excellence.
It is still too early to estimate the feasibility of the transaction, and it is likely the regulatory resistance to Chinese firms will remain steadfast. The Ministry of Finance opposed Chinese bids both in the sale of Phoenix - which failed - and the sale of Clal Insurance.
Delek has been made several unsuccessful attempts to offload Phoenix in the past few years. It first tried to sell to the Kushner family of the US, then to Chinese conglomerate Fosun, and finally to American firm AmTrust. Delek, run by CEO Asaf Bartfield, must sell its holdings in Phoenix due to the Concentration Law.
Phoenix, managed by CEO Eyal Lapidot, is one of the five largest insurers in the Israeli market. It has been controlled by Delek since 2006. It recently concluded a deal to buy the outstanding shares in Excellence - which it now wholly owns.
However, management has been in the midst of a conflict with its unionized workers, who have taken several measures to protest against the “lack of good faith on the part of Phoenix management in the negotiations over a collective agreement” - as they claim.
As previously mentioned, Delek must sell its Phoenix holdings in the coming years, but the sale is not merely because of the legal requirement; the company has switched its strategy and wishes to focus on its energy business.
In recent years, it has liquidated its holdings in US insurer Republic, Israeli firm Barak Capital, Britain’s Roadchef, Delek Europe, and has sold most of its shares in Delek US. It is further expected to sell its holdings in the Tamar natural gas reservoir and in desalination firm IDE.
Published by Globes [online], Israel business news - www.globes-online.com - on June 30, 2016
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