Bloomberg News

Ormat Shares Beat U.S. Unit by Most Since 2005: Israel Overnight

November 25, 2011

Nov. 24 (Bloomberg) -- Ormat Industries Ltd., the Israeli- based developer of geothermal power plants, is beating its U.S. unit in the stock market by the most since 2005, buoyed by the third-largest shareholder’s efforts to buy a bigger stake.

Ormat Industries gained 0.1 percent to 21.12 shekels at the 4:30 p.m. close in Tel Aviv, paring its drop since the middle of this year to 5.7 percent. Ormat Technologies Ltd., which is 60 percent-owned by the Israeli holding company, retreated 3.1 percent to $17.11 in New York yesterday and is down 22 percent since the end of June. The Bloomberg Israel-US 25 Index of the largest New York-traded Israeli companies fell to the lowest level in seven weeks, led by Teva Pharmaceutical Industries Ltd.

The FIMI Opportunity Fund is in negotiations to buy an additional stake in Ormat from the controlling shareholder, Bronicki Investments Ltd., according to a statement filed to the Tel Aviv Stock Exchange this week. Investors should buy the U.S. subsidiary’s shares and sell the Israeli stock, according to DS Securities & Investments and Leader & Co. Investment House.

“The entrance of an investor may have encouraged other shareholders and created this premium,” said Amir Foster, an analyst at DS Securities in Tel Aviv. “The U.S. unit is now trading at a discount, and is a good trade in the long run.”

The Tel Aviv benchmark TA-25 Index fell 1.1 percent to 1,017.64 and is down 23 percent this year. The Bloomberg Israel- US 25 Index declined 2.2 percent to 80.12, swelling this year’s drop to 23 percent. U.S. markets are closed today for a holiday.

‘Smaller Spread’

Yavne, Israel-based Ormat Industries’ 16 percentage point outperformance yesterday over Ormat Technologies was the biggest since the 18 percentage point premium in the second half of 2005, according to data compiled by Bloomberg.

The FIMI fund owns a 10.5 percent stake in Ormat Industries, Norstar Holdings Inc. has 10.95 percent of the shares and Chief Executive Officer Yehudit Bronicki and her husband own 35.1 percent of the company.

“The takeover bid by FIMI has brought a lot of interest in the shares,” said Oz Levi, an analyst at Leader in Tel Aviv. “Eventually the shares will trade at a smaller spread.”

FIMI will acquire a 12 percent stake in Ormat at 24 shekels a share for a total of 340 million shekels, TheMarker reported on Nov. 22, without saying how it obtained the information.

A message left at the offices of FIMI wasn’t immediately returned. A spokesman for Ormat, Dror Sharvit, declined to comment on the report.

Geothermal Projects

Ormat Industries reported a third-quarter loss of $258,000, compared with a profit of $25.1 million in the same period a year earlier.

Reno, Nevada-based Ormat Technologies reported third- quarter adjusted earnings of 2 cents per share, down from 21 cents in the same period last year.

Israel, whose population of 7.7 million is similar to Switzerland’s, has about 60 companies traded on the Nasdaq stock market, the most of any country outside North America after China. It is also home to the largest number of startup companies per capita in the world.

Israeli technology companies raised $522 million in capital during the third quarter, $47 million less than in the second quarter, according to the Israel Venture Capital-KPMG Quarterly Survey released Oct. 24.

Shekel Weakens

The shekel weakened 0.5 percent to 3.7891 per U.S. dollar at 4:49 p.m. in Tel Aviv. The currency has dropped 7 percent this year, headed for its worst performance since 2002.

Partner Communications Co. lost 3.1 percent today to 35.01 shekels, or the equivalent of $9.24. The U.S. shares fell to the lowest level since 2006, dropping 2 percent to $9.29 yesterday.

The country’s second-largest mobile-phone provider said third-quarter profit slid 44 percent as competition increased.

Cellcom Israel Ltd., the country’s largest, retreated 2.9 percent to 63.5 shekels, or the equivalent of $16.76, after the U.S. shares declined 4 percent to $16.93.

Shares will probably reach 85 shekels in the next 12 months, down from a previous price estimate of 96 shekels, Bank Leumi Le-Israel Ltd.’s analysts, including Gil Dattner, wrote in an e-mailed report.

Teva, the world’s largest maker of generic drugs, lost 2.2 percent to 140.70 shekels, or the equivalent of $37.14. The shares retreated 2.9 percent to $37.50 in the U.S. yesterday.

--With assistance from Alaa Shahine in Dubai. Editors: Brendan Walsh, Glenn J. Kalinoski

To contact the reporter on this story: Tal Barak Harif in New York at tbarak@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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