Delek Group unit buys Ithaca stake to expand global activity
SHOSHANNA SOLOMON
TEL AVIV, Israel (Bloomberg) -- Delek Group Ltd., a partner in Israel’s two largest offshore natural gas fields, said a unit has acquired 20% of Canada’s Ithaca Energy Inc. for about $66 million as part of its strategy to transform itself into a global energy company.
An unnamed, wholly owned subsidiary of Delek signed a binding investment agreement with Ithaca, which is traded on the Toronto Stock Exchange and London’s Alternative Investment Market, Delek Group said in a statement on Oct. 9. The acquisition, financed through Delek’s own resources, would make the unit the largest shareholder in Ithaca. Delek said it could increase its stake in Ithaca “as appropriate.”
The acquisition is “an important strategic step for Delek Group on its way to increase its activity and establish its position in the international market,” Asaf Bartfeld, Delek CEO, said in an emailed statement on Sunday. “We plan to continue to take advantage of opportunities in the market and assess additional strategic investments in international energy companies.”
The shares of Delek Group and its oil and gas exploring units have been among the worst performing stocks this year in Tel Aviv. The company has been selling stakes in its insurance companies, real estate subsidiaries and other holdings as part of a strategy to focus on energy activities. Delek partners in its Israel activities with Houston-based operator Noble Energy Inc. Delek shares were little changed at 890.1 shekels at the close in Tel Aviv as the TA-25 benchmark index lost 0.2%.
The deal will enable Delek to also operate without Noble, said Noam Pincu, an analyst at Tel Aviv based Psagot Investment House. “The acquisition gives them more flexibility to operate globally,” Pincu said by phone. “Only time will tell if this is a good investment, depending on the future price of oil.”
The past year’s drop in oil prices and regulatory delays in developing the largest Israel gas field prompted Delek in March to delay plans to dual-list shares in London.
