The sale of Israeli insurance company The Phoenix Holdings Ltd. (TASE: PHOE1;PHOE5) to China's Fosun Group has been thrown into doubt following the arrest of the chairman Guo Guangchang by the Chinese authorities.
Israel's Ministry of Finance Supervisor of Capital Markets, Insurance and Savings Dorit Salinger has been mulling for months whether to grant Fosun a permit to buy the Phoenix but following the latest developments in China, such an acquisition is looking more and more unlikely. The permit awarded is personal and granted to the person standing at the head of the buyer and clearly the Israeli authorities cannot give such a permit to a person under arrest and suspected of criminal offenses. That said the Ministry of Finance is waiting to see how matters unfold in China and whether Guangchang will be cleared of all suspicions.
Overseas reports say that Guangchang is helping police with their enquiries and it is not yet clear why he was arrested.
In August, the "Wall Street Journal" reported that Guangchang was suspected of granting favors 12 years ago to a senior figure in a Chinese government company. It is unclear whether these allegations are connected to his arrest.
In January 2015, Fosun and Phoenix's controlling shareholder Delek Group Ltd. (TASE: DLEKG) signed a sale agreement. In June, a binding agreement was signed to sell Delek's 52.3% stake to Fosun for NIS 1.76 billion plus interest at an annual rate of 4.75% from September 30 2014 until the sale is closed.
Delek reported last month that the amount of the sale including interest has climbed to NIS 1.85 billion.
Trading was suspended this morning of Phoenix and Delek shares on the Tel Aviv Stock Exchange. delek announced that Fosun had told them it was business as usual and the arrest of its chairman should not affect the sale. A delegation from China would visit Israel to clarify the situation.
Published by Globes [online], Israel business news - www.globes-online.com - on December 13, 2015
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