El Al Israel Airlines Ltd. advanced the most in more than six months amid press reports investors, including entertainment mogul Haim Saban, are interested in acquiring a controlling stake in the country’s flagship carrier.
Shares of the airline that posted losses in three of the past four years advanced 8.2 percent to 0.557 shekel, at the close in Tel Aviv, the biggest gain since May 6. Trading was almost 10 times the three-month daily average, as some 15 million shares were exchanged. The benchmark TA-25 Index advanced 0.7 percent.
Avi Gabbay, a former chief executive of Bezeq Israeli Telecommunication Corp., is in talks with Haim Saban, the chairman of Los Angeles-based Saban Capital Group, and other investors to organize the bid, a person familiar with the matter told Bloomberg News today. An El Al official declined to comment when contacted by Bloomberg News by phone. Fimi Opportunity Funds in October backed out of plans to buy a stake in the airline.
“El Al is rising on the back of press reports of a potential new investor group looking to take control of the company,” Zach Herzog, head of international sales at the brokerage unit of Psagot Investment House Ltd. in Tel Aviv, said today by phone. “A deal will need to be inked before investors feel confident the share levels reached today are indicative of the company’s underlying value.”
Saban Capital last year bought a stake in Partner Communications Co., Israel’s second-largest mobile phone provider, bringing the man who made his fortune with the Mighty Morphin Power Rangers licensed characters back to the Israeli telecommunications scene. Saban’s FSBR Group, together with Moshe Arkin and Apax Partners LLP, agreed to sell their stake in Bezeq, the incumbent phone carrier, to 012 Smile Communications Ltd. for $1.8 billion in October 2009.
The Lod, Israel-based airline’s stock has advanced 16 percent this year amid speculation of a takeover bid. Fimi backed away from an investment of as much as $75 million on Oct. 10 that the carrier said was subject to the renegotiation of its employee contracts. Chief Executive Officer Eliezer Shkedi was cited by Globes newspaper on Oct. 23 as saying “serious” local and foreign groups were interested in investing in the company. Earlier this month Shkedi said he would resign after four years in his post.
The airline is struggling to boost profitability amid increasing competition from low-cost airlines, saying in February it would cut 200 temporary jobs to trim costs. A Transportation Ministry panel in September rejected almost all of Israel’s domestic carriers’ requests for regulatory relief when an Open Skies agreement with the European Union comes into effect in 2014. Last month, it introduced a discount brand offering flights to five European destinations.