Israeli investors relieved as China’s Fosun comes through with Ahava purchase

Israeli investors relieved as China’s Fosun comes through with Ahava purchase

After a deal to buy Phoenix Insurance fell apart, the Chinese firm returns for its third Israeli acquisition

Illustrative: Dead Sea mineral mud produced by Ahava (AP Photo)
Illustrative: Dead Sea mineral mud produced by Ahava (AP Photo)

After a series of successful deals was interrupted by a failed one, Chinese conglomerate Fosun is back in Israel, announcing early Monday that it was acquiring Ahava, the Israeli maker of Dead Sea cosmetic products.

The deal is worth NIS 290 million ($77 million), both companies said.

Fosun CEO Liang Xinjun said that the deal would help his company expand its product line. “We will endeavor to extend the success of this brand to China and other countries,” he said.

The deal generated a sigh of relief in the Israeli business community after a debacle in February when, after months of work on the deal, Fosun called off its purchase of Israel’s Phoenix insurance company.

First announced last June, Fosun had agreed to buy 52.31 percent of Phoenix from Yitzchak Tshuva’s Delek Group as the company sought to downsize in order to comply with new laws that limit the size of conglomerates. In a statement to the Hong Kong Stock Exchange, Fosun said that it was unable to complete the deal under the conditions presented by the Israeli firm.

The Phoenix deal was marred from the start. Upon hearing of the planned buyout, Phoenix workers called a strike, declaring that they would “embitter the lives of the new owners.” At issue was the union’s contention that Tshuva had refused to discuss distributing a percentage of the money the company stands to earn to the workers, which the workers said their contracts called for. According to reports in the Israeli media, Fosun suspected that it could have labor issues with the Phoenix employees and demanded a discount on the market price of shares in case it had to compensate them and/or resolve other issues.

In addition, the deal was looked upon disapprovingly by the Treasury’s supervisor of insurance, Dorit Selinger, due to allegations that Fosun founder and chairman, Guo Guangchang, was involved in alleged criminal activities. Guo went missing for several days in December. He was said to have been arrested on corruption charges.

Nothing came of the charges – according to the company, Guo was detained not as a suspect, but as a witness in other cases – but it was too late to salvage the Phoenix deal. Now, however, Fosun is “back to normal,” Liang told a Chinese newspaper.

“After the case we have seen several major bond issuances approved by different government authorities, and successfully launched several initial public offerings on the A-share market. People in these matters are [acting] with the most sensitive political sense. They would not cooperate with Fosun if they are worried about us,” he was quoted as saying.

That’s good news for Israeli companies – because Fosun has an affinity for them. In 2013, Shanghai Fosun Pharmaceutical – a subsidiary of the company – purchased 95% of Israel’s Alma Laser, a maker of medical laser devices, for some $220 million, and in 2014 Fosun led a round of Chinese investment in Israel’s Check-Cap, developer of technology that allows noninvasive colon cancer screening.

Commenting on the purchase, Liand said that Fosun would continue to seek out opportunities in Israel.

“We feel very confident about the market in Israel and continue to seek suitable investment opportunities in different areas in the country,” he said, adding that “we are glad to have succeeded in acquiring such a famous, strong and successful brand as Ahava under this mutually beneficial agreement.”

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