Yitzhak Tshuva, controlling shareholder in Delek Group Ltd. (TASE: DLEKG) with 61% of its capital, is again trying to give the capital market a signal that the group's share price on the TASE is too low. Delek Group today published an offer to purchase for 1.1% of the company's shares at NIS 544.50 per share, 10% higher than yesterday's closing price on the Tel Aviv Stock Exchange. The deadline for accepting the offer is September 5. If the offer is fully subscribed, Delek Group will spend NIS 74 million on buying shares.
Delek Group decided to publish its current offer following a 25% dive in its share price over the past three months that pushed its market cap down to less than NIS 6 billion. Investors in the capital market were not especially enthusiastic about the announcement; the company's share price is up only slightly today at NIS 497.
Response to an earlier offer to purchase (by Tshuva himself) a year ago for 3% of Delek Group's shares was sparse. Tshuva spent a mere NIS 15 million on buying 0.25% of the group's shares, less than 10% of the offer, which amounted to NIS 183 million. The share price also fell below NIS 500 at that time, and Tshuva decided to publish an offer to purchase at a relatively low share price of NIS 520.
The latest dip in Delek Group's share price is partly attributable to the fall in global oil prices and the deal for acquiring the Chevron's North Sea assets for nearly $2 billion through Ithaca, a subsidiary.
Following the cool response to the deal in the capital market, Delek Group held a conference call with analysts and investors two weeks ago, in which the company's leaders and controlling shareholder (Tshuva) strove to alleviate concern about the deal.
On that occasion, Tshuva said, "Closure of the deal is slated for the fourth quarter, probably in November. We want to close the deal as soon as possible because of Ithaca's tax asset - accumulated losses. Once it is closed, we will save up to $2.2 billion on taxes. Final payment for Chevron's assets will be $1.5 billion."
Concerning the money that Delek Group will have to pay in order to complete the deal, the company stated, "The amount is $450 million, and we have several sources for it - it can come from the sale of the holding in Phoenix, a pre-IPO sale of shares in Ithaca, or other sources. We feel very comfortable with the deal and the various options we have for raising this amount."
Published by Globes, Israel business news - en.globes.co.il - on August 8, 2019
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