Israel Corp plans split into 2 companies
One of Israel's biggest holding firms is considering spinning off some of its assets into new, listed company in bid to attract broader range of investors, including more specialists
If the separation is approved, shareholders of Israel Corp will also hold shares in the new company, it said in a statement. It estimated the separation process would be completed within six to 12 months.
According to the move under consideration, Israel Corp will continue to hold fertilizer and specialty chemicals maker Israel Chemicals (ICL) and Oil Refineries, Israel's biggest refinery.
That would amount to it divesting itself of a bundle of assets analysts view less positively, and the company's shares rose almost 9 percent in response. Upon completing the process, Israel Corp also said it would refrain from making investments in new companies.
The separation of Israel Corp's holding in Oil Refineries will also be considered in the future, it said, which would leave Israel Corp holding only its cash cow - ICL.
The companies IC Power, Qoros, shipping company Zim, chipmaker TowerJazz and IC Green would be held by a new company whose place of registration for trading would be on an international exchange and/or the Tel Aviv bourse.
Every shareholder in Israel Corp will receive a new share in the separated company alongside each existing share in Israel Corp, the company said.
Noam Pincu, an analyst at the Psagot brokerage, said that Israel Corp trades at a steep discount of 46% to its net asset value, with the market valuing the company's assets excluding ICL and Oil Refineries at a negative $900 million.
"We believe this move will lead to a significant narrowing of the discount and ultimately it will stabilize at a more reasonable level for holding companies - 20-25%," said Pincu, who raised his rating for the stock to "buy" from "hold."
Pincu said heavily indebted Zim is expected to restructure its debt before the spin-off goes ahead, "which will increase the level of certainty regarding the new company."
Israel Corp is controlled by Israeli billionaire Idan Ofer.
"Our goal is to increase exposure of the company's holdings to both a broader and more focused investor base in the areas of activity relevant to each holding," Israel Corp Chairman Amir Elstein said.
Qoros, a joint venture between Israel Corp and Chery Automobile, is also expected to launch its new car before the spin-off happens, Pincu said.
He valued the profitable IC Power, which is building a power plant in Peru, at $1.3 billion and said it could go public in the future.
