Delek Group mulls Roadchef acquisition from sister co

More than a year after Yitzhak Tshuva-controlled Delek Real Estate Ltd. (TASE: DLKR) put British motorway services company Roadchef up for sale, no buyer has been found. Tshuva now appears to have found the answer: Delek Group Ltd. (TASE: DLEKG), which he also controls, will acquire the company. Delek Group and Delek Real Estate are in talks on a deal, under which Delek Group will assume Delek Real Estate's debt taken to acquire Roadchef.

The sale of Roadchef is part of Delek Real Estate's new strategy inaugurated by its fresh CEO Eran Meital to sell off the company's non-core businesses to focus on two holdings: Delek Global Real Estate Ltd. and its Israeli arm, Dankner Investments Ltd.

Roadchef operates 29 service compounds, with petrol stations, restaurants, cafes, and hotels, on Britain's motorways. Delek Group acquired the company in early 2007 through Delek Real Estate, then a subsidiary, and Delek Petroleum Ltd. (TASE: DLKP.B7; DLKP.B8) for ₤158 million. Delek Real Estate's share of the deal was ₤120 million.

Delek Real Estate took a ₤150 million loan from Merrill Lynch to finance the acquisition. Last year, it took an additional NIS 310 million owners loan from Delek Group to refinance part of the Merrill Lynch. Roadchef itself owes ₤180 million in bonds issued to banks.

If Delek Group acquires Roadchef, it will assume Delek Real Estate's NIS 310 million owners loan as well as Roadchef's outstanding debt. The total debt assumed will exceed NIS 1 billion.

The talks between Delek Group and Delek Real Estate are still only preliminary. Delek Real Estate is also in talks with other potential buyers for Roadchef. Delek Group nevertheless believes its takeover of Roadchef is good for both it and Delek Real Estate because this will reduce Delek Real Estate's debt. For Delek Group, taking over Roadchef would be synergetic with other gas station operations in Europe, held through Delek Petroleum and Delek Israel Fuel Corporation Ltd. (TASE: DLKIS) units Delek Europe Holdings Ltd. and Delek Benelux BV.

Delek Group's share rose 2% in morning trading to NIS 737.50, giving a market cap of NIS 8.24 billion. Delek Real Estate's share rose 2.8% to NIS 3.64, giving a market cap of NIS 663 million.

Published by Globes [online], Israel business news - www.globes-online.com - on December 24, 2009