The billionaire founders of Israeli cybersecurity company Wiz have entered preliminary talks to acquire a stake in Herzliya Medical Center after businessman Yitzhak Tshuva’s proposed purchase ran into regulatory obstacles, Calcalist has learned.
The exclusivity period granted to Tshuva to complete the transaction has expired, prompting controlling shareholder Yair Landau to begin discussions with other prospective buyers. Among them are Wiz founders Assaf Rappaport, Yinon Costica, Ami Luttwak and Roy Reznik, who each received about $3 billion from the company’s sale to Google.
Wiz founder Assaf Rappaport
(Photos: Omer Hacohen, Tomeriko )
The four entrepreneurs manage their business interests through a family office headed by Yotav Costica, Yinon Costica’s brother, who left his position as CEO of More Mutual Funds to take on the role.
Talks with the Wiz founders are being conducted at the same valuation agreed in Tshuva’s proposed transaction: 1.1 billion shekels, or approximately $340 million.
However, the Health Ministry is insisting that Clalit Health Services increase its stake in Herzliya Medical Center to a controlling interest as a condition for approving any transaction. Clalit currently owns 40% of the hospital, and the demand has cast doubt over whether talks with any buyer can mature into a deal.
The chances of an agreement currently appear limited, though negotiations are continuing.
Tshuva, the controlling shareholder of Delek Group, signed an agreement in January to acquire 27% of Herzliya Medical Center at the 1.1 billion-shekel valuation. Under the agreement, he was to purchase 25% from Landau, who owns 50% of the hospital, while Clal Insurance was to sell another 4%, split equally between Tshuva and Landau.
Clal Insurance currently owns 10% of the hospital.
Tshuva is still making significant efforts to persuade the Health Ministry to approve the transaction and is examining alternative ownership structures. He also met Health Ministry Director-General Moshe Bar Siman Tov in an attempt to secure approval for a structure under which he and Landau would jointly own more than 50% of the hospital.
The ministry has refused, maintaining that Clalit should hold control of the facility. Tshuva generally prefers to control the assets he acquires.
The ministry’s position has also cooled interest among other potential buyers. A staffing and nursing services company examining the transaction has not advanced negotiations, while the former Wiz executives are considering the implications of entering a heavily regulated business overseen by both the Health Ministry and the Capital Market Authority.
Clal could break the deadlock
One possible solution would involve Clal Insurance selling its entire 10% stake. Clalit could then purchase those shares and increase its holding to 50%, while the incoming investors acquire half of Landau’s stake.
The Wiz founders have completed one major Israeli investment since selling their company to Google, acquiring control of Reshet 13 television.
Clalit, which insures more than half of Israel’s population, serves as a key source of patients for Herzliya Medical Center. The hospital conducts about 26,000 procedures annually, including cardiac surgery, neurosurgery and oncological surgery, and operates cardiac catheterization and fertility units. It is considered one of Israel’s largest private medical institutions in these fields.
The hospital, founded in 1982, employs about 600 people and operates from a 9,000-square-meter property owned by Landau. The real estate would remain under his ownership as part of any share transaction.
Clal Insurance invested in the hospital in 2016, purchasing its 10% stake at a valuation of about 700 million shekels, approximately $215 million. The hospital is managed by CEO Danny Engel.
In 2021, Landau sold 10% of his holdings to Clalit, which was expected to increase its stake to 50% in a second stage of the transaction. The Health Ministry blocked that move at the time, forcing Clalit to remain at 40%.
Ministry pushes for public health control
In February, a month after Tshuva signed his agreement, Bar Siman Tov sent Clalit a message indicating that the ministry expected the health fund to control the hospital.
Like all Israeli health funds, Clalit requires a Health Ministry permit to own or control a private hospital. In its letter, the ministry said it expected Clalit to control the volume of procedures performed at Herzliya Medical Center in a way that would benefit the public health system, as well as to control the hospital’s board.
Although it did not explicitly specify an ownership threshold, the demand effectively means Clalit would be expected to increase its stake to at least 50.01%.
The ministry began reviewing Clalit’s ownership permit several months ago, independently of the proposed sale, as part of a broader policy requiring health funds to control the private hospitals in which they hold stakes.