Hagag Group completes purchase of Bazan from Israel Corp
In just under a month, surprising the capital market, Hagag Group Real Estate Development Ltd. (TASE: HGG), controlled by Yehuda Eido Hagag and Yitzhak Hagag, has completed the purchase of the majority stake in Bazan (Oil Refineries) (TASE: ORL), owner of the Haifa Bay Oil Refinery. Hagag Group purchased 16.7% of Bazan from Israel Corporation (TASE: ILCO), controlled by Idan Ofer, for NIS 555 million, after discounting the share of shares purchased in the NIS 60 million dividend declared by Bazan but not yet paid.
The deal leaves Israel Corporation with a 7.3% stake in Bazan, which accredited investors to whom Israel Corporation sold 9% of Bazan last November have an option. The price of this transaction was NIS 0.91 per share, and Israel Corporation’s stake in Bazan was reduced from 33% to 24%. At that time, Israel Corporation estimated that it would post a net loss of NIS 269 million on the deal. The current deal with Hagag Group means Israel Corporation is relinquishing control of Bazan fifteen years after buying it from the state.
Hagag Group has granted Israel Petrochemical Enterprises (TASE: PTCH), which controls Bazan along with Israel Corporation, a put option to sell Hagag Group its 13.5% stake in the company. If the option is exercised, Hagag Group’s stake in Bazan will increase to 30%. The price paid by Hagag Group to Israel Corporation is approximately 25% below the current stock market price.
Bazan’s market capitalization at the close of yesterday’s session was NIS 4.39 billion. Since the beginning of this year, its stock price has recovered strongly, up 52%, but it has still not returned to the level it was before the outbreak of the coronavirus pandemic. Over the past three years, Bazan’s stock price has fallen 23%.
Bazan refines crude oil and produces and sells fuels, polymers and other chemicals. He owns a 2,140 dunam (535 acre) site in Haifa Bay leased to the state for eighty years. The potential Hagag Group sees in Bazan lies in the future evacuation of the site, which has become more likely after the government’s decision in March last year to end petrochemical activity in Haifa Bay and promote a development plan for the area in a decade.
Hagag Group deals in residential, office and commercial real estate, mainly in Tel-Aviv. It is also active in the hotel business and recently decided to enter the protected housing market.
The company said in a statement last night: “We are proud to join the Bazan Group, one of Israel’s oldest and largest companies. We intend to act in accordance with the government’s decision on the future of petrochemical plants in Haifa. Bay, for the benefit of shareholders, employees and partners of the company. »
Published by Globes, Israel business news – en.globes.co.il – on April 18, 2022.
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