Bloomberg News

Phoenix Rises on Bets Elections to Delay Sale: Tel Aviv Mover

October 11, 2012

The Phoenix Holdings Ltd. (PHOE1), Israel’s fourth-largest insurer by market value, rose the most in more than a week on speculation the call for early elections will delay the potential sale of the company.

The shares of the Givataim, Israel-based company rose 6.1 percent, the most since Oct. 3, to 8.081 shekels, at the close in Tel Aviv. Investors traded 93,632 shares, 107 percent of the three-month average volume. The TA-25 index advanced 0.9 percent.

Phoenix is one of the companies likely to be sold once parliament approves cabinet recommendations requiring companies to reduce cross-holdings in financial and industrial businesses, Meir Slater, an analyst at DS Securities & Investments in Tel Aviv, said today by phone. Prime Minister Benjamin Netanyahu called elections for early next year, a decision that may delay parliament’s approval of the proposals, first announced in April, that also limit ownership structures to three layers.

“The looming elections will postpone a parliament decision on the recommendations and Phoenix was the company that would have been most affected by them,” Slater said. “Now there is no pressure to sell and management is not focused on this.”

Seeking to boost competition in the economy, Netanyahu planned to give conglomerates four years to comply with the new corporate structure rules.

Phoenix is owned by businessman Issac Tshuva’s Delek Group Ltd. (DLEKG), which also has investments in oil and natural gas exploration companies. Some 20 families control 25 percent of the listed companies and 50 percent of the total market share in the Tel Aviv Stock Exchange, one of the highest concentrations among developed economies, the Bank of Israel said in its 2009 annual report.

Clal Insurance Enterprise Holdings Ltd. (CLIS), owned indirectly by IDB Holding Corp., was another prime candidate for sale under the new rules, Slater said. Clal’s sale will probably go ahead anyway, independent of the new rules, because of IDB’s need to sell assets to meet creditor commitments, Slater said. Clal’s shares were up 3.8 percent.

IDB Holding’s second-quarter results included a so-called going-concern warning, and the company is trying to raise money through the sale of assets to pay back creditors. Its IDB Development Corp. unit sold a stake in Clal Industries and Investments LTD.. to Access Industries Holdings Inc. in July. In August a Berkshire Hathaway (B:US) unit acquired Clal Insurance’s U.S. unit.

To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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