The Delek Group signed a non-binding memorandum of understanding on Monday to sell its controlling share of The Phoenix Holdings, the major insurance and financial company, to the Fosun International group of China. Fosun is the second largest investment firm in China. Initial contacts between the two sides were initially disclosed by TheMarker’s Hebrew edition.
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Delek is expected to sell Fosun a stake of about 44% to 52% of The Phoenix at a market valuation of about 3.7 billion shekels ($937 million). This valuation is derived from the equity capital of the Phoenix as of the end of September. If the sale goes ahead, Delek will receive 1.7 billion to 1.9 billion shekels in cash. Delek will not be required to fund part of the purchaser’s funding of the transaction, in contrast with a prior deal that was on the table that which have had the company sold to the Kushner Group of New York. That firm is headed by Jared Kushner, son-in-law of real estate magnate Donald Trump. The Kushner Group bid fell through late last year.
Fosun International has been given a 75-day exclusive period in which to conduct due diligence investigations of The Phoenix, and to submit the necessary documentation to the Israeli Finance Ministry to obtain a license to take control of the company. The Phoenix currently manages about 60 billion shekels in pension and managers’ insurance assets.
The purchase of The Phoenix would not be Fosun’s first foray into the Israeli market. In April 2013, Fosun’s pharmaceutical group purchased Alma Lasers, which has offices in Caeserea. Alma was the result of a merger of the Israeli firm MSQ and the U.S. firm Orion Lasers.
Interestingly, Fosun is a huge enterprise. Most of its holdings are in the insurance business, but it has operations in a range of sectors, including leisure activities and clothing. Last year the company acquired insurance companies in Portugal and the United States, the French Club Med resort chain and the One Chase Manhattan Plaza building in New York. In the past decade, the company has branched out into financial services, retailing, steel production and mining. It was founded in 1992 by Guo Guangchang, who is the company’s chairman.