Fosun buys Delek’s Phoenix stake for $471 million

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Yitzhak Tshuva

Yitzhak Tshuva‘s Delek Group said on Sunday it had agreed to sell its 52.31 percent stake in insurer Phoenix Holdings,  Israel’s fourth-largest insurance provider by market value, to China’s Fosun International for 1.8 billion shekels ($471 million).

This amount could change and will continue to bear 4.75% interest until the deal is closed the consideration will be paid in full at the closure date.

The agreement is subject to various regulatory approvals and can be cancelled by either side if it is not closed after five months, Delek said in a statement to the Tel Aviv Stock Exchange.

Globes reports that 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, says Globes, was the need to come to terms with Phoenix’s employees, and question of the role of Phoenix CEO Eyal Lapidot.

Fosun paying for the shares at a valuation of 3.45 billion shekels ($902 million). The price represents a 28 percent premium to Phoenix’s closing share price on Thursday, Delek said. The market cap on the Tel Aviv Stock exchange was of NIS 2.7 billion.

Asaf Bartfeld, Delek Group chief executive officer, said in an e-mailed statement. “It is an important strategic deal for the group and will add 1.8 billion shekels in cash to the company’s coffers. We are in a great starting position to implement our plans and undertake strategic investments in the international energy market, which will be synergistic and complementary to our activities.”

In July 2014, Delek signed a non-binding memorandum of understanding to sell a 47 percent stake in Phoenix to New York-based Kushner Group for nearly 1.7 billion shekels but that deal fell apart in December.

Fosun has been expanding in the insurance industry with the acquisition of assets globally.

Delek owns stakes in the giant Tamar and Leviathan natural gas fields off Israel’s Mediterranean coast and has been divesting its financial and other non-core holdings.

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