Shapir will not acquire 5% of the Ashdod Oil Refinery from Paz
Shapir Engineering has declined its option to purchase a 4.99% stake in the Ashdod Oil Refinery from Paz. The decision follows regulatory hurdles and the company's failure to meet conditions regarding the sale of its natural gas distribution licenses.
Shapir Engineering did not exercise an option to purchase 4.99% of the shares of the Ashdod Oil Refinery from Paz, which is expected to offer the shares to the highest bidder. Zohar Levi and Summit, who hold 13% of the refinery's shares, are the leading candidates to acquire them, but there are other interested parties.
In recent weeks, Shapir has encountered difficulties in obtaining a control permit for the refinery. The Concentration Committee decided by a majority of 2 to 1 to recommend that the Government Companies Authority not approve Shapir's request to increase its holdings in the refinery, as acquiring control of the Ashdod Oil Refinery would place it among the most concentrated entities in the economy.
At the same time, the Government Companies Authority informed Shapir that it would not approve an increase in its holdings as long as it has not completed the sale of its two natural gas distribution licenses. The deal to sell them for 230 million shekels to an infrastructure entity was signed in April but has not been completed. The sale is a condition for increasing Shapir's holding, which is in violation of the Natural Gas Law regulations before the Natural Gas Authority.
Shapir had long set its sights on the Ashdod Oil Refinery, and when Paz was required to sell its holdings in it, it signed a deal that would lead it to acquire control of the refinery subject to receiving a permit. A year later, Shapir purchased 10% of the refinery's shares for 156 million shekels and received three options for a future increase in its stake, subject to approvals.
The first option was to purchase 4.9% of its shares from Paz, based on a valuation of 1.55 billion shekels or the average share price over the last 90 trading days. The other two options allow Shapir to grow to 45.1% or 65% of the refinery's shares through the allocation of refinery shares. A control permit for the refinery is required for a holding of 20% or more, so if Shapir does not receive it, it is doubtful whether it will want to increase its stake.
