Business in Brief: Sale of Phoenix to Fosun Officially Falls Through

Leumi, Harel to partner in 8 billion shekel mortgage venture; Leumi suing Nakash brothers for 172m shekels; Leumi board expected to approve Nehama’s bid for J’lem Econ Corp.; Mixed results registered on TASE.

Stock prices flash on an electronic screen displaying world clocks at the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Dec. 11, 2014.
Bloomberg

Sale of Phoenix to Fosun officially falls through

The sale of insurance company Phoenix to Chinese investors Fosun is officially being scrapped, after more than a year in the works.

The Delek Group, which controls Phoenix, had been close to selling the insurance company to the Chinese investment giant for $1.85 billion, but after Fosun chairman Guo Guangchang was detained by Chinese authorities in December, Israel’s Banks and Insurance Commissioner Dorit Salinger indicated that she would not approve the transaction.

Delek issued a statement to the stock exchange Tuesday saying that the parties had agreed to forego the deal. Sources said that the sides understood that the sale was unlikely to gain regulator approval. (Michael Rochvarger and Asa Sasson)

Leumi, Harel to partner in 8 billion shekel mortgage venture

Bank Leumi and Harel Insurance Investments and Financial Services said on Monday they plan to partner together in providing 4 billion shekels ($1.03 billion) of mortgages this year, and the same amount in 2017.

Mortgages are considered fairly stable in Israel, with central bank closely monitoring bank portfolios. The venture will help Harel, one of the country’s largest insurers, diversify the investment portfolio of its clients at a relatively low risk, the companies said in a statement. Harel will provide up to 50% of each mortgage loan and pay Leumi, Israel’s second largest bank, a management fee.

The deal has yet to be signed and is still dependent on various conditions, the companies said, without offering details. (Reuters)

Leumi suing Nakash brothers for 172m shekels

Bank Leumi is seeking to minimize its damage from the Jerusalem Economic Corp. deal, and is suing the Nakash Brothers for 172 million shekels for backing out of the agreement to buy a controlling share in the company.

The brothers live in New York, where their business dealings focus on real estate and the hotel sector, and are a major customer of Leumi’s U.S. branch. The bank is accusing them of failing to act in good faith.

The bank had been seeking to sell Eliezer Fishman’s controlling share in Jerusalem Economic Corp. to the Nakash Brothers for 350 million shekels, but that deal went bad four months ago. (Michael Rochvarger)

Leumi board expected to approve Nehama’s bid for J’lem Econ Corp.

Bank Leumi’s board is expected to meet Thursday to approve a bid by businessman Shlomo Nehama to take over Jerusalem Economic Corp.

As part of the deal, Leumi would give Nehama’s group the 28% of Jerusalem Economic Corp. shares that are being used as collateral against Fishman’s 2 billion-shekel personal debt to the bank. However, Leumi will not actually be receiving cash at this stage – instead, Leumi will merely be eligible to receive payment should the company’s shares increase in value within the next five years.

The company is currently trading at an all-time low market cap of 630 million shekels. As part of the agreement, Nehama will be issuing a 400-500 million shekel rights offering for the company, and he is expected to invest some 200 million shekels in the company through that offering. (Michael Rochvarger)

Mixed results registered on TASE

The Tel Aviv Stock Exchange closed with mix results and minor changes Tuesday, as European shares turned downward and Wall Street opened with gains.

The blue-chip Tel Aviv-25 Index lost 0.1% to close at 1,406 points, while the broader Tel Aviv-100 Index gained 0.06% to close at 1,209 points. Bank shares lost 0.1%, and real estate shares lost 0.2%. Total turnover was 1,157 billion shekels. (Omri Zerachowitz)