Israeli energy conglomerate Delek said its planned sale of a controlling stake in Israeli insurer Phoenix Holdings to China’s Fujian Yango Group has been called off by both sides after it failed to secure regulatory approval.
It did not give a reason for the failure. However, the Israeli government has expressed concerns over the purchase of key financial assets such as insurers by Chinese investors, fretting over pension cash.
Delek, which holds significant stakes in Israel’s largest natural gas fields and other energy assets, is required to sell some of its financial assets under a new Israeli regulation that prohibits large domestic conglomerates from holding both financial and non-financial businesses.
Delek signed a binding agreement last August to sell its 52.3 percent stake in Phoenix to Yango for 1.97 billion shekels ($557 million). That price was raised to 2.15 billion shekels in April.
“Due to the prolonged process of obtaining the approval for the sale of control in Phoenix to Yango Group, the two sides agreed today, June 26, to cancel the agreement,” Delek said in a statement.
“The company has been approached by other entities in Israel and abroad regarding the sale of its holdings in Phoenix and will continue to act to sell its holdings as required by law.”
In March last year a non-binding agreement by Delek to sell Phoenix to a U.S. insurer, which industry sources identified as AmTrust Financial Services, was canceled by both sides.
Delek had previously agreed to sell its Phoenix stake to China’s Fosun International for 1.8 billion shekels but the deal collapsed when conditions were not met.
The IDB Development group, another Israeli conglomerate, has also faced regulatory difficulties in its attempts to sell control of Clal Insurance to Chinese investors.
($1 = 3.5351 shekels) (Reporting by Tova Cohen; editing by Susan Fenton)
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