Another delay in the Shikun & Binui Energy deal: Who will win - Keystone or Generation?
This is not the first time that Shikun & Binui and Generation have pushed back the deadline in a deal of more than 4 billion shekels that could change the balance of power in the Israeli energy market. In the background, the Keystone offer by Navot Bar continues to hover.
The saga surrounding the sale of Shikun & Binui Energy continues. The Generation fund reported that it and Shikun & Binui have agreed on another extension of the due diligence and exclusivity period, this time until July 28, 2026 (inclusive). This is already a whole series of delays: the original agreement was signed in mid-May, and since then the closing date has been postponed several times - on July 20, July 22, July 24, and now again.
In mid-May, Shikun & Binui and the Generation fund signed a memorandum of understanding for the acquisition of all shares of Shikun & Binui Energy, in a reverse triangular merger structure, based on a base valuation of approximately 4.2 billion shekels, which could rise to approximately 4.5 billion shekels subject to meeting milestones. Generation received an exclusivity period, during which Shikun & Binui is not permitted to discuss other offers - and the parties are extending this period again and again instead of signing a binding agreement.
Although the deal is being delayed, at this stage it is impossible to know for sure what is behind the delays. On one hand, the multitude of extensions may suggest that the parties are struggling to bridge the gaps, mainly regarding the allocation of regulatory risk, and that the deal is moving further away.
On the other hand, history shows that repeated delays are not necessarily the end of the road. The Hot Mobile deal, for example, was also delayed several times before it was finally closed and sold to Delek. In other words, another extension could also indicate negotiations that simply need more time to finalize details.
As long as the exclusivity is in effect, Shikun & Binui is prevented from officially discussing the competing offer from the Keystone fund, managed by Navot Bar: approximately 4.35 billion shekels in cash and in a single payment, without contingent consideration. Keystone has already signed a memorandum of understanding for a credit facility of up to 2 billion shekels through Keystone Power, to show that the financing is ready. If Generation does not sign by the new date and no further extension comes, Shikun & Binui will be released and will be able to examine this offer and others.
The exposure of Israeli savers is indirect but significant: Migdal, Harel, Menora, and Phoenix are among the major shareholders in Generation. As the struggle between the funds continues, the chance that the price will rise in favor of Shikun & Binui increases, but along with it, so does the uncertainty. Until July 28, this coming Tuesday, everything remains open.
