The Ticker: Israeli Energy Companies' Profits Face Hit From Government Plan to Lower Margins

Golf plans to take Adika online unit public; Eliahu gets extension to divest Union Bank stake; Tel Aviv shares end higher as Teva rout offset by Mylan gains

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A gas station in Haifa.
A gas station in Haifa.Credit: Moran Maayan

Energy company profits face hit from governmentt plan to lower margins

Energy companies that operate filling stations stand to see their profitability fall come January after a joint committee of the energy and finance ministries last week tentatively approved a plan to reduce profit margins on price-controlled 95 octane gasoline and the fixed fee for self service. Under the proposal, which still awaits a public hearing November 9 before final approval, the so-called marketing margin will be cut by 8 agorot (2 cents) per liter to 52 agorot while the self-service charge will be cut 16 agorot. At an estimated savings for the driving public of 28 million shekels annually for each 1 agora drop in for the marketing margin that adds up to 224 million in lost income for the energy companies, which include publicly traded Paz Oil, Delek Israel and Dor Alon as well as Ten, whose bonds are traded publicly. Profits at the smaller companies, which don’t generate profits from convenience stores at their filling stations, are to be hurt hardest by the changes. (Yoram Gabison)

Golf plans to take Adika online unit public

The Golf apparel chain is weighing a 50 million shekel ($14.2 million) initial public offering of Adika that would value the online unit at as much as 200 million shekels. The plans, which the company confirmed last week, would include new shares as well as those controlled by Golf and Adika’s founding executives. Golf, a publicly traded unit of Clal Industries, bought Adika in 2015 at 40 million shekels and lists the company on its books as worth 52 million, but an outside evaluation puts its real value at around 99 million due to unexpectedly strong sales after the mostly online merchant opened its flagship brick-and-mortar stores last march in Tel Aviv’s Dizengoff Center. Golf regards Adika as its growth engine. Although it doesn’t break out Adika’s results, its financial reports show that Adika executives have received 6.1 million shekels in bonuses in recent quarters, signaling that the unit has been meeting targets. (Eran Azran)

Eliahu gets extension to divest Union Bank stake

Shlomo Eliahu won a third, and this time open-ended, deadline to divest his stake in Union Bank of Israel as negotiations to merge it into Mizrahi Tefahot Bank continue. Bank of Israel Banks Supervisor Hedva Ber granted the extension last week, less than a month before the latest deadline of October 31. Eliahu has been under orders to divest his 27.2% stake in Israel’s sixth-largest bank since he bought control of Migdal Insurance five years ago, putting him in violation of the law barring one person from controlling two major financial institutions. The Bank of Israel conditioned the latest extension on being updated about the status of the merger once a quarter and in the event they fail will then face a 90-day deadline to begin selling the shares on the Tel Aviv Stock Exchange. Eliahu would prefer the merger, which values his Union stake at 400 million shekels ($113.6 million) over a stock market sale. (Michael Rochvarger)

Tel Aviv shares end higher as Teva rout offset by Mylan gains

Tel Aviv shares played a game of catch up with Wall Street on Sunday, resuming trading after a long Sukkot holiday weekend. In abbreviated trading for the intermediate days of Sukkot, the blue chip TA-35 index finished up 1% at 1,447.18 points, while the TA-125 added 0.9% to 1,317.17, on turnover of 479 million shekels ($136.1 million). Teva Pharmaceuticals shares plummeted on the loss last week of its Copaxone exclusivity (see story on this page) but Mylan jumped 19.4% to 134.40 shekels in anticipation of profits it will now earn on generic Copaxone. Other gainers included a 1.9% rise for Jerusalem Economy Corporation to 9.13 and a 1.6% gain for Frutarom to 280.50. Biomed shares rallied, leaving the index up 10.7% at 432.66 points, paced by a 137% jump for Mannkind to 20.42 after the U.S. approved label changes to its insulin product Afrezza that should give a boost to sales. SodaStream fell 1.3% to 228.60. (Shelly Appelberg)