Tel Aviv, September 14, 2017. Delek Group (TASE: DLEKG, US ADR: DGRLY) ("the Company") announces that further to what was stated in section 1.9 of the 2016 Periodic Report published on March 30, 2017 (Ref. No. 2017-01-033078) and what was stated in section 3 of the update to Chap. 1 of the Periodic Report dated August 30, 2017 (Ref. No. 2017-01-075706), the Company announces that on September 14, 2017, the Company signed a binding agreement with Sirius International Insurance Group, Ltd. ("The Purchaser") concerning the sale of all the Company's holdings in The Phoenix Holdings Ltd (52.25%) ("the Agreement" and "the Phoenix", respectively) for a total consideration of NIS 2.5 billion plus interest and subject to adjustments that were stipulated in the Agreement.The consideration is based upon 90% of the Phoenix's shareholders' equity according to the financial statements of the Phoenix as of June 30, 2017.
The transaction will take place in several stages, as follows:
In the first stage, by September 18, 2017 the Purchaser will acquire from the Company in an off-market transaction 4.9% of the share capital of the Phoenix at a price per share of NIS 16.988, for an overall consideration of NIS 208 million in cash. The above mentioned consideration is final and not subject to the completion of the second stage as stipulated below. As the transaction will be completed for the balance of the shares as stated below, the consideration will be adjusted so that the Company will be paid an additional amount of NIS 25 million for this stage (so that the overall consideration will reflect a share price of NIS 19.076).
The Company has granted the Purchaser a call option to acquire the balance of the shares (47.35% of the issued share capital of the Phoenix, as of the date of the Agreement) for a period of 60 days from the date the Purchaser is provided with due diligence materials as agreed between the parties. During such period, the Purchaser will be entitled to complete its due diligence of the Phoenix and notify the Company of its decision to exercise the option to acquire the entire balance of the Company's shares in the Phoenix ("the Second Stage of the Agreement"). During this period the Purchaser will act to complete its due diligence of the Phoenix, and is entitled, at its discretion, to send the Company an irrevocable notice of its intention to complete the Agreement.
The Agreement includes a defined timetable to apply for a control permit from the Commissioner for Capital Markets, Insurance and Savings at the Ministry of Finance ("the Application" and "the Commissioner", respectively) and to obtain the required approvals. As part of the Agreement the Purchaser has undertaken to contact the Commissioner soonest to submit the Application in accordance with the law and not later than 45 days from the date of signature of the Agreement, and it will act to advance receipt of the permit.
As the Second Stage of the Agreement will be completed, the Company will be paid the balance of the consideration of NIS 2,284 million in cash plus interest and subject to adjustments stipulated in the Agreement.
To the best of the Company's knowledge, the Purchaser is a global insurance company with activity in the insurance sector in 140 countries.
The Agreement includes representations of the Company concerning the Phoenix and indemnification undertakings, subject to caps and on terms as customary in transactions of this kind.
The Agreement includes contingent terms, which include inter alia authorizations from governmental bodies, including: a control permit from the Commissioner, approval of the Securities Authority, approval of Tel-Aviv Stock Exchange Ltd, approval from the Anti-Trust Commissioner, and non-occurrence of a material adverse event (MAE) in the Phoenix until the closure date.
It has been stipulated in the Agreement that if 4 months after the date of submission of the Application the terms have not been met for completion of the transaction and the regulatory approvals required have not yet been received and there has been no rejection for receipt of the said approvals (accumulated conditions), there will be two automatic extensions for the completion of the Agreement, one of 3 months and the second of a further month only to receive the regulatory approvals, provided that no rejection notice has been previously received. In the event that at the end of these periods, i.e., at the end of 8 months from date of submission of the Application at the latest, if not all conditions precedent are fulfilled, the Agreement for the acquisition of the balance of the Company's holdings in the Phoenix (47.35%) will be null and void. However if the regulatory approvals are obtained within 8 months period, the transaction will be completed according to the timetable set out in the Agreement, even if not within the 8 month period.
As of June 30, 2017 the balance of the value of the Company's investment in the Phoenix came to NIS 2,076 million such that the transaction reflects an accounting profit of NIS 400 million. At this stage the Company is assessing the accounting implications of the transaction including timing of recognition of such profit.
There is no certainty that the transaction will be completed and the Company will report on process of the stages of the transaction as required by law.
This is a convenience translation of the original HEBREW immediate report issued to the Tel Aviv Stock Exchange by the Company on September 14, 2017.
About The Delek Group
Delek Group is an independent E&P and the pioneering visionary behind the development of the East Med. With eight consecutive finds in the Levant Basin, Delek is leading the region's development into a major natural gas export hub. In addition, Delek has embarked on an international expansion with a focus on high-potential opportunities in the North Sea and North America. Delek Group is one of Israel's largest and most prominent companies with a consistent track record of growth. Its shares are traded on the Tel Aviv Stock Exchange (TASE:DLEKG) and are part of the TA 35 Index.
For more information on Delek Group please visit www.delek-group.com
Head of Investor Relations
Delek Group Ltd.
Tel: +972 9 863 8444