Delek in Talks to Sell Its European Unit for $1 Billion

Sale would provide Tshuva's conglomerate with net cash flow of $370 million.

Delek Group, the energy and real estate conglomerate controlled by Yitzhak Tshuva, said yesterday that it is in advanced negotiations to sell all or part of its European unit to an unnamed foreign buyer.

The company provided no further details in a statement to the Tel Aviv Stock Exchange, but sources said the potential buyer is a British investment fund and the two are valuing the unit, Delek Europe NV, at 750 million euros ($1 billion).

It should be emphasized that at this stage of the negotiations there is no certainty that a binding agreement to sell will be signed, Delek said.

Shares of Delek Group, which holds major stakes in the Tamar and Leviathan gas fields, were down 1.2% to 1,236 shekels in late TASE trading on Thursday.

The sale of Delek Europe, which was formed in 2007, will not likely result in a gain for Delek, but the group will enjoy a net cash flow of some 1.3 billion shekels ($372.4 million) to 1.4 billion shekels when the unit repays shareholders' loans now on its books.

Delek is represented in the deal by Bank of America, whose Israeli office is headed by Yoram Inbar.

Delek Europe, headed by CEO Boaz Chechik (the former CEO of CAL - Israel Credit Cards), operates filling stations and convenience stores in France and the Benelux countries.

Delek Group owns 80% of the shares and its Delek Israel subsidiary owns the rest. Former Delek Europe Chairman Hod Gibso is involved in the negotiations on behalf of the buyer.

The sale of Delek Europe comes as the group also seeks to divest its 52% stake in Phoenix Holdings, the parent of the Phoenix insurance company, at a market value of about 3 billion shekels, but it has had little success so far.

Emil Salman