Israel Corp. (ILCO) plans to create a new unit that will own all of its businesses apart from Israel Chemicals Ltd. (ICL) and Oil Refineries Ltd (ORL) as the holding company controlled by billionaire Idan Ofer seeks to attract investors.
The Tel Aviv-based company may list shares of the new business on a local or foreign stock exchange, Israel Corp. said in a statement today. Obtaining approval for the unit, whose holdings will include Israel Corp.’s stakes in Tower Semiconductor Ltd. (TSEM:US), IC Power and Qoros Auto Co., may take six to 12 months, it said.
“It’s an interesting move,” Noam Pincu, an analyst at Psagot Investment House Ltd. in Tel Aviv, said today by phone. “It will make it easier for investors as they will be able to invest in the segment they prefer and increase the value of its separate units.”
Shares of Israel Corp. rallied 8.4 percent at the close in Tel Aviv, the biggest gain since July 2009, on bets the reorganization will give investors greater flexibility in choosing which industries they would like to put their money in. The stock had tumbled 17 percent this year through yesterday, underperforming the benchmark TA-25 Index’s 0.9 percent advance in the same period.
The move would create two “flavors of holding organizations,” Amir Elstein, chairman of Israel Corp., said today in a phone interview. The first one, with Israel Chemicals and Oil Refineries, would “create clarity and focus” for investors, he said. The new, second unit will enable Israel Corp. to “grow new companies, navigate them” and provide them with the opportunity to attract strategic players, he added.
If the reorganization is approved, Israel Corp. shareholders will get shares in the new unit, the company said. Israel Corp. added it would refrain from making new investments and may consider separating Oil Refineries and Israel Chemicals in the future.
Other Israeli holding companies have taken steps to make their businesses more appealing to investors. Delek Group Ltd. (DLEKG), which owns stakes in the country’s two biggest natural gas fields via units, said in May it plans to focus on the oil and gas business by selling its non-energy assets.
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