With Friends Like That

"Competition is good. I support competition," declared The Israel Corporation (TASE: ILCO) CEO Yossi Rosen stated, his face shining with his trademark sincerity and gravitas. "But the idea of splitting off the Ashdod oil refinery from the Haifa refinery is economically ridiculous.  It may have worked in the days of Oslo, when we thought Israel would be a bridge to the Middle East. But today's it's clear that the Oil Refineries cannot be split."

Fours years later, after that urgently summoned meeting at which Rosen explained why Oil Refineries must not be demerged and privatized because it's a lunatic fallacy of weak-minded paper-pushers, it has been, and we were in for a double surprise.

On Monday Zadik Bino, the czar of the local energy sector and owner of Paz, agreed to pay the state a gigantic NIS 3.5 billion for the Ashdod refinery (that very refinery that Yossi Rosen had said couldn't make it on its own). And on Tuesday, Rosen himself ignited lightning negotiations to buy a third of Paz, after it had won the Ashdod tender.

Bino might say in his defense that he always thought the Ashdod refinery was a terrific business, and that the moment it was split off and put on the block, he wanted Paz to have it. But what could Rosen possibly say?

He could always say that what applied in 2001 is not true any more. But it won't fly: just a year and a half ago Rosen repeated, at a conference marked by tycoons wailing about the treasury and Justice Ministry clerks, that - "Based on economic horse sense, the Ashdod refinery should have long been turned into a warehouse, but the state doesn't always operate based on economic principles. Israel has no room for two refineries."

So why does Rosen now want to buy 33% of Paz, which is paying NIS 3.5 billion for that would-be warehouse? What's his explanation?

Actually, that's a question that doesn't bear asking. Rosen doesn't owe anybody any excuses. When you're backed by the billionaire Ofer brothers, the only ones due any explanations are them.

That sneaking feeling

What do Nochi Dankner and Zadik Bino have in common?

Both have carried out gigantic acquisitions this year, taking the markets by utter shock.

Dankner upped and bought the controlling interest in Koor Industries (NYSE: KOR) according to a company value of $1.27 billion, and last week Bino bought the Ashdod oil refinery for $800 million.

They have something else in common, too. Both were forced to pay top dollar because they were contending against a third party who was just as dogged as they were. The party drove up the price, right up to the wire, and suddenly backed off.

When you're up against fierce competition in an open (or closed) tender, emotions can run high. Sometimes you just want to screw the other guy, no matter what it takes.

But when the other guy punches and punches, only to suddenly fold and walk away from the table, leaving you there alone, you may suddenly feel mighty queasy, and that nasty feeling may stay for months or years: did the other guy quit because you're bigger, richer, whatever - or because the price had run too high?

A common denominator: Tshuva

Nochi Dankner faced off with Yitzhak Tshuva over Koor. Dankner shocked the market with the price he named, and snatched Koor from under Tshuva's nose.

For a few hours, Dankner was walking on air and then Koor stock began to dive, and dive and dive, toward a company value of $750 million, which was 40% below the valuation according to which Dankner agreed to pay. Even super-confident Nochi must sometimes feel that nasty niggling feeling in his heart, that he'd been over-eager.

And then Zadik Bino found himself up against the very same man, Yitzhak Tshuva, in a contest over the Ashdod oil refinery.

The Dor-Alon group withdrew from the contest at NIS 3.01 billion, but Delek ground on, raising the price to a terrifying height of NIS 3.46 billion. Bino slammed back an offer of NIS 3.501 billion, and Delek's representatives suddenly sprang to their feet and waved bye bye. And Bino had his refinery.

Happily for Bino, the Ashdod oil refinery is not a publicly traded corporation so he is spared Nochi Dankner's embarrassment, of a share price plunging far below the price he paid.

Nochi, Bino, Tshuva, Dor-Alon's Dudi Wiessman, and Lev Leviev of Africa Israel (TASE: AFIL) fame - these are five of the biggest names in Israel's marketplace. They are all good friends; they smile at each other and have nothing but good things to say about each other.

But make no mistake: behind closed doors each has a nickname for each of his fellow tycoons, and it isn't "Butch"  - "Gambler", "egomaniac", "strangler who won't let anybody else make a dime", "watch out for him" - you get to guess who calls who what.

But there's one about which all the tycoons agree: he's a gambler.

And maybe he is. But really good gamblers know when it's time to get up from the table.