The state aims to sell as much of its holding as possible in Oil Refineries Haifa in a flotation on the Tel Aviv Stock Exchange (TASE) planned for November-December this year. Market sources expect that more than 50% will be offered in the first offer for sale.
At present, the two main leading candidates to acquire Oil Refineries Haifa are Israel Petrochemical Enterprises Ltd. (TASE:PTCH) and Israel Corp. (TASE: ILCO), although more bidders will also reach the finish line. The price tag for Oil Refineries Haifa will be set as a multiple of the sale price of Oil Refineries Ashdod in the tender scheduled to be held in late June. It is assumed that Oil Refineries Ashdod will be sold for $300-400 million. However, bidding for Oil Refineries Ashdod could boost its sale price, which in turn will increase the price for Oil Refineries Haifa, which accounts for two-thirds of Oil Refineries current activities.
On the basis of the valuation for Oil Refineries Ashdod, a value of $600-800 million can be derived for Oil Refineries Haifa. Market sources believe, however, that the final value for Oil Refineries Haifa could reach $1.2 billion, which would put the company straight into the Tel Aviv 25 index of the 25 largest companies on the TASE.
Petrochemical Enterprises, controlled by the Federmann group, Leonid Nevzlin, and others, has already declared its intention of bidding for Oil Refineries Haifa. Yesterday, Petrochemical Enterprises acquired stock market shell Scailex Corp. ltd. (Nasdaq: SCIX; TASE: SCIX) (formerly Scitex), which will serve as a lever for energy investments, beginning with Oil Refineries Haifa.
Ofer Brothers has also expressed interest in Oil Refineries Haifa, probably bidding through Israel Corp. until recently, Israel Corp. owned about a quarter of Oil Refineries, which it sold to the state, with the intention to return and bid for the company when it was privatized, on the basis of Israel Corp.’s accumulated experience in the energy industry in recent years.
In addition to Israel Corp. and Petrochemical Enterprises, other consortia, comprising Israeli and multinational energy companies, are expected to bid for large blocks of shares in Oil Refineries Haifa. Israeli fuel supply companies are barred from acquiring control of Oil Refineries Haifa.
Bidding for Oil Refineries Haifa is expected to be especially lively in view of the high current refining margins in the world; the company’s profitability and the advantages Oil Refineries Haifa will retain even after the sale of Oil Refineries Ashdod to private parties; the closure of the only refinery in Cyprus, which adds a nearby customer; and the start of reform in Israel’s fuel supply market, which will enable a single entity to own oil import, refining and marketing interests.
Published by Globes [online], Israel business news - www.globes.co.il - on May 30, 2006
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