ADNOC and BP Offer $2 Billion for 50% of NewMed Energy, Valued at $3.96 Billion
Proposed Acquisition Marks Entry into Israel's Growing Energy Sector and the Establishment of a Joint Venture Focused on Gas Development in International Areas
The Abu Dhabi National Oil Company (ADNOC) and BP have made a non-binding offer to purchase 50% of NewMed Energy, a subsidiary of Delek Group and the largest stakeholder in the Leviathan offshore natural gas field. The offer, which is worth approximately $2 billion, involves acquiring the public's shares and a partial acquisition of Delek Group's stake. The two international energy giants, who own 10% of the global energy sector, intend to make NewMed the arm of their activity in the Mediterranean and form a joint venture focused on gas development in international areas, including the East Mediterranean.
The offer price is 12.05 ILS ($3.38) per share and reflects a 72% premium above the pre-deal market price, valuing the entire company at about 14.1 billion ILS, or $3.96 billion. NewMed Energy is the largest stakeholder in the Leviathan reservoir, the largest natural gas reservoir in the Mediterranean, and holds 45.34% of its shares. The company's CEO, Yossi Abu, has stated that the offer from ADNOC and BP is a "vote of confidence" in the Israeli gas industry and will help move NewMed from the regional arena to the global arena.
The proposed transaction is subject to the approval of NewMed's shareholders and the court's decision according to Article 350 of the Companies Law. The details of the joint control agreement between the three companies have not yet been agreed upon. If the transaction is completed, NewMed will become a private corporation equally held by the BP-ADNOC joint venture and Delek Group, which will hold the remaining 50% of the shares.
The non-binding offer is a sign of the strengthening economic links between Israel and the United Arab Emirates since the two countries agreed to normalize ties in 2020. Last year, Abu Dhabi's Mubadala Petroleum acquired a 22% stake in the east Mediterranean Tamar gas field for $1 billion. For BP, the deal highlights its focus on growing natural gas production after slowing down its shift away from fossil fuels. NewMed and its partners plan to nearly double Leviathan's production to 21 to 24 bcm by 2027 and are exploring plans for a liquefied natural gas (LNG) terminal to further boost exports.
In conclusion, the offer from ADNOC and BP to purchase 50% of NewMed Energy is a significant step in the energy industry and showcases the potential and attractiveness of the Israeli natural gas sector. The proposed transaction, if approved, will result in a new joint venture focused on gas development in international areas, including the East Mediterranean.
