Summit Oil Becomes Largest Shareholder in Ashdod Refinery Amid Control Battle

The stock of the Ashdod Oil Refinery (Baze'a) has seen a significant surge, closing the trading week at approximately 144 shekels per share. This follows a 7% rise on the last trading day and a 17% jump over two days. Year-to-date, the stock has climbed 144%, and over the past twelve months, its value has more than doubled, with the market cap approaching 1.8 billion shekels. The recent surge began after Paz, the former controlling shareholder, sold its remaining 5% stake. Summit, led by Zohar Levy, acquired most of these shares for about 75 million shekels, increasing its holding to approximately 17% and making it the largest shareholder. This move signals potential strategic ambitions beyond a purely financial investment.

Shapir Engineering, which holds about 10% of Baze'a since its split from Paz in 2023, faces regulatory hurdles in its bid to increase its stake. Shapir has an option to reach up to 65% by 2028, which would necessitate a tender offer. However, the Concentration Committee, comprising the Competition Authority, the Treasury, and a Prime Minister's Office representative, recommended against granting Shapir controlling interest. The committee cited the refinery's critical importance to the state in routine and emergency situations, as well as Shapir's significant size, as reasons for its caution. The final decision rests with the Government Companies Authority, which has added a condition regarding the completion of Shapir's sale of its natural gas operations, valued at approximately 230 million shekels.

Market observers believe other entities are also exploring moves within the refinery. Unusual trading volumes suggest additional parties have been quietly accumulating shares, potentially aligning with Summit or acting independently. Menora Mivtachim Pension, the third-largest shareholder with about 9%, could play a decisive role if a tender offer is made. Baze'a's recent financial performance has been strong, with second-quarter 2026 revenues reaching about 3.2 billion shekels and a net profit of approximately 205 million shekels, a significant turnaround from a slight loss last year. This improvement was driven by wider refining margins, though refinery utilization was affected by equipment issues and conservative hedging policies.

Beyond refining, management is pursuing a strategy to transform Baze'a into an energy company. Plans include constructing an 800-megawatt power station on its Ashdod site, alongside energy storage and a server farm. This expansion would dramatically alter the company's profile, which currently supplies about 40% of Israel's fuel and a similar proportion of cooking gas. The combination of critical infrastructure, extensive land, and ambitious energy plans explains the growing interest in control and the regulator's cautious approach. The ultimate decision on control is expected in the coming months, with the immediate focus on who can amass a sufficient bloc of shares to influence the outcome of any future tender offer.