Adaltak Negotiates to Acquire 50% Stake in Hagit Power Plant for NIS 800 Million

Adaltak, an energy company controlled by Uri Adelsburg, is in preliminary talks to purchase a 50% stake in the Hagit power plant from Shikun & Binui Energy. The stake is valued at approximately NIS 1 billion, or NIS 800 million net of debt. Currently, Adaltak owns 25% of the Hagit plant, which is located near the Elikim junction and operates at a capacity of about 660 megawatts. If the deal is completed, Adaltak's ownership will increase to 75%. The remaining shares are held by Keystone Fund (16%) and Menora Mivtachim (9%), both of which may join the transaction as they claim a right of first refusal to purchase half of the shares sold, potentially acquiring an additional 25%.

The shares held by Shikun & Binui Energy were included in its sale to the infrastructure REIT fund Generation Capital, in a deal valued at NIS 4.45 billion that has not yet closed. Shikun & Binui, the parent company, preferred Generation's offer over a competing bid from Keystone Fund. Adaltak plans to finance the purchase by bringing in Leumi Partners with a NIS 2 billion investment, half of which will serve as an exit for Adelsburg and the other half will be injected into the company. Without this investment, Adaltak would struggle to complete the acquisition. Adaltak declined to comment on the details.

Separately, Adaltak is also negotiating with Shikun & Binui to build the Sorek power plant, estimated to cost over $1 billion. Adaltak favors the bid from Solel Boneh, a subsidiary of Shikun & Binui, which is tens of millions of dollars higher than competing Chinese offers.

As part of the acquisition of Shikun & Binui Energy by Generation Capital and its merger into PowerGen (controlled by Generation), Generation is reviewing various portfolio adjustments. The sale talks for the Hagit stake stem from Generation's need to secure approvals from the Electricity Authority and the Competition Authority, which have proven challenging. Generation has devised several solutions, including selling part of its Hagit stake. Recently, Generation swapped shares with Rafeq Energy, exchanging its holdings in the Alon Tavor plant for Rafeq’s shares in the Reindeer plant in Sharon, where Generation holds 52% and has an option to sell to partner Nofar Energy if required by regulators.

The original deal structure with Shikun & Binui, signed two weeks ago, was based on a NIS 4.05 billion base price plus NIS 150 million interest and a conditional NIS 300 million payment tied to project progress over five years. In final negotiations, the conditional payment was converted to cash, raising the total to NIS 4.3 billion plus NIS 150 million interest. The transaction is structured as a reverse triangular merger, with PowerGen creating a special purpose vehicle that merges into Shikun & Binui Energy, preserving existing licenses, power agreements, and financing contracts. Following the merger, PowerGen is expected to more than double its operations. The acquired company owns gas-fired power plants, solar facilities, storage systems, thermo-solar energy, and projects in Europe and the US, with a total asset portfolio of 6.3 gigawatts, including 3.2 gigawatts of active, revenue-generating assets.