Delek to Raise $613 Million From Unit Sales for Leviathan

Delek Group Ltd. is poised to raise as much as $613 million from the sale of two units to help it develop Leviathan, Israel’s biggest natural gas field, as it focuses on its oil and gas business.

The company agreed to sell its Delek Europe B.V. gas stations unit to U.K. private equity fund TDR Capital LLP for 355 million Euros ($492 million), it said today. The deal comes a day after Delek reached an accord to dispose of a controlling stake in Republic Companies Inc. for $121 million.

“The move enables Delek to streamline its structure around oil and gas and to support the investments it needs for Leviathan,” Roni Biron, a Herzliya, Israel-based analyst at UBS AG, said by phone today.

Delek is the best performer on the TA-25 index in the past 12 months as the company sold stakes in non oil-and-gas assets and its Tamar field started production. Talks about an investment in Leviathan continue, after a deadline was missed in March, Australia’s Woodside Petroleum Ltd. said today. Delek shares declined 0.2% to 1,415 shekels today, bringing its 12-month return to 46 percent.

Delek said TDR would pay 180 million euros in cash for the gas stations business with the remainder paid over five years including 5 percent annual interest, according to the statement today. A similar arrangement was made for the Republic Companies deal, with half paid in cash up front and the rest over three years at a yearly rate of 6.5 percent, according to a filing to the Tel Aviv bourse yesterday.

Delek sold stakes in Delek Automotive Systems Ltd. and Delek U.S. Holdings Inc. last year and disposed of shares in Phoenix Holdings Ltd. The company said in December it plans to set up a new entity to hold its energy exploration interests that will seek to list in London.

This week’s asset sales are “in line with Delek Group’s strategy to focus on oil and gas activities and will significantly increase the cash reserves of the company,” Delek chief executive officer Asaf Bartfeld said in a statement today.

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