Ampal-American Israel Corp. (AMPL) will almost double its stake in East Mediterranean Gas Co., an Egyptian gas pipeline operator, with an agreement to buy a 5.9 percent stake for $128.3 million in cash and shares.
The acquisition, from Israel's Merhav MNF Ltd., will boost Ampal's holding in EMG to 12.5 percent, Tel Aviv-based Ampal said in a Business Wire statement late yesterday. The purchase was approved by Ampal's outside directors because Yossi Maiman, the biggest shareholder, owns Merhav, the company said.
``The investment in EMG fits Ampal's stated long-term strategy of increasing its investments in cash generating companies in its core areas of expertise,'' Maiman, Ampal's chairman and chief executive officer, said in the statement.
Ampal bought its first shares in EMG about a year ago with the aim of using cash generating by the company for other investments. EMG is constructing an underwater pipeline from El-Arish, Egypt, to the Israeli port of Ashkelon to ship gas to Israel under a 15-year agreement between the two countries.
Ampal said it will pay Merhav $60 million in cash, a promissory note entitling Merhav to up to $20 million more in cash or Ampal shares, and the rest in Ampal stock. The pipeline is scheduled for completion in the first quarter of 2008.
Shares of Ampal closed yesterday in New York up 3 cents, or 0.7 percent, to $4.66.
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