The Ofer-Federman group through their Israel Corporation and Israel Petrochemical Enterprises together won the controlling shareholding and bought a 46 percent interest in the Haifa Oil Refineries Monday. The issue price reflects an astounding company value of $1.57 billion - above the price set in last week's institutional bidding round, when 44 percent of the shares in the refineries were sold at a NIS 1.28 billion company value.

The success of the tender was attributed to the two-stage mechanism of the sale held by the Government Companies Authority (GCA).

Monday's tender ended the privatization process of the Oil Refineries, starting six months ago with the sale of the Ashdod Refineries to Paz Oil for NIS 3.25 billion. All together, the GCA, headed by Eyal Gabbai, has quite a lot to show for the process: about NIS 10 billion from both refineries.

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On Monday, the state held the public phase of the issue. Together the Israel Corp-Petrochemicals group bought 46 percent and the general public bought 10 percent in this final round. Under the companies' agreement, the Ofers' Israel Corporation has agreed to pay for 80 percent, and David Federman's Israel Petrochemicals for 20 percent.

The final results showed that 56 percent of the Oil Refineries was sold for NIS 3.3 a share, giving the company a NIS 6.6 billion value.

The public holds 54 percent - 44 percent it bought in last week's tender offer, and 10 percent allocated to the public yesterday. The remaining 46 percent is what the Ofer-Federman group bought. The offer was over-subscribed by 23.4 percent and there were upwards of 5,500 requests to buy shares - an unprecedented participation rate from the Israeli public.

The two companies announced their alliance in a special note to investors Monday. In the morning, shares in Africa Israel, controlled by Lev Leviev, had been soaring and Israel Corp had been dropping, on assessments that Leviev might sweep the Haifa facility away. But Africa Israel dropped out of the contest at the last second, leaving Israel Corp in the lead.

Petrochemicals handled its end of the deal via Scailex (formerly known as Scitex). The two companies also agreed that they will act hand-in-hand regarding director appointments at Oil Refineries, in keeping with whatever shareholding they achieve. Scailex also has a 120-day option of increasing its share in Oil Refineries to 46 percent of their jointly achieved holding, at the cost of the share price at IPO.

The decision to construct the Consolidated Refineries Ltd. (CRL) in the Haifa bay was made by the British government in the mid-1930s, which was relying on the estimates of its allies, the democracies of Western Europe, that the face-off with the Axis states - Germany and Italy - was nearing. The Allies were concerned that Italy would blockade the passage of oil tankers in the Mediterranean.

The Israeli government acquired CRL in 1959. When the Ashdod refinery was built in 1972, the Israel Corporation acquired 26 percent of its shares, and the company was renamed Oil Refineries Ltd. (ORL). In February 2006, the state acquired Israel Corporation's shares, making it the sole shareholder.