Saturday, June 3, 2023

Paz mulls spinning off Ashdod oil refinery


Energy and retailing company Paz Oil Company Ltd. (TASE:PZOL) has not succeeded in selling its oil refinery. The company’s board of directors has instructed its management to prepare a plan for spinning off the Ashdod oil refinery from the company, through distribution of a dividend in kind or some similar device, in order to turn the oil refinery into an independent, completely separate company. “This will enable the company to focus on growth in its other core areas of business, in accordance with the strategic plan set out by the board of directors in may this year, such as in retailing and real estate,” Paz’s announcement said.

Paz is Israel’s leading fuel station and convenience stores company, with 256 fuel stations. It owns real estate on which 106 of its fuel stations stand, and rights in other plot of land. The company rents areas on its fuel station sites to various tenants, such as restaurants, cafés, and stores.

Paz also sells fuel and oil products directly to companies and airlines.

In the past year Paz has received non-binding offers to buy the oil refinery, which has caused it heavy losses in recent years, but the offers were substantially below the $1 million value that the company was aiming for, and apparently even lower than the book value of the oil refinery

In the past few months, Paz which has a market cap of NIS 3.8 billion and no controlling shareholder, has been in a process of being sold or merged. Last week, Yosef and Shlomo Amir, controlling shareholders in retail chain Freshmarket (TASE: FRSM), made a merger offer which would make the Amir brothers the controlling shareholders in Paz. Under the proposal, Freshmarket would be merged into Paz, and its shareholders would receive 36% of the shares in Paz. In addition, the shareholders in Freshmarket would be given the righto buy 9% of the shares in Paz (fully diluted, after the merger) at a price to be agreed between the sides but not higher than the price in the merger.

Freshmarket has a market cap of NIS 1.8 million. The merger would create a NIS 5.6 billion company.

Freshmarket made its offer a day after Shikun & Binui Holdings Ltd. (TASE: SKBN) made an offer for merger between Paz and its subsidiary Shikun & Binui Energy in exchange for 48% of the shares in Paz (after the merger). This offer values the merged company at NIS 7.3 billion, and Shikun & Binui Energy itself at NIS 3.55 billion.

Published by Globes, Israel business news – – on July 18, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

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