Clalit blocks Wiz founders’ bid for Herzliya Medical Center in $40 million deal
The health fund is exercising its right of first refusal to acquire Yair Landau’s 10% stake, in line with the Health Ministry’s push for health funds to control private hospitals.
Clalit will acquire 10% of the shares of Herzliya Medical Center from Yair Landau. Calcalist has learned that the acquisition will be made by exercising Clalit's right of first refusal.
Landau had reached an agreement with the founders of Wiz, led by Assaf Rappaport, to sell them 10% of his holdings for NIS 120 million ($40M), implying a valuation of NIS 1.2 billion for the hospital.
Clalit's decision comes against the backdrop of a Ministry of Health policy aimed at ensuring that health funds control private hospitals. Ministry Director General Moshe Bar Siman Tov effectively torpedoed the purchase of 25% of Herzliya Medical Center by Yitzhak Tshuva, a deal that had already been signed and was awaiting regulatory approval. The reason was this policy.
Rappaport and his Wiz co-founders, Yinon Costica, Ami Luttwak, and Roy Reznik, began negotiations with Landau after the deal with Tshuva stalled following the Ministry of Health's intervention. A 10% minority stake might have been more acceptable to the ministry, but the ministry remained firm in its position that Clalit should control the hospital.
Last week, Clalit executives, led by chairman Yohanan Loker and CEO Eitan Wertheim, met with senior Ministry of Health officials for a working meeting to establish the resources needed to exercise the right of first refusal. Clalit subsequently informed Landau that it would exercise the right.
Landau currently holds 50% of the shares, Clalit holds 40% and Clal Insurance holds 10%. Following the transaction, Clalit's stake will rise to 50%, Landau's will fall to 40%, and Clal Insurance will remain at 10%. Tshuva is now out of the picture, having originally sought to gain control of the hospital through his deal with Landau.
Tshuva, the controlling shareholder of Delek Group and Israel's largest gas tycoon, signed an agreement in January to acquire 25% of Herzliya Medical Center at a valuation of NIS 1.1 billion. The shares were to be purchased from Landau. As part of the deal, Clalit sold 4% of its stake, with half going to Tshuva and half to Landau. Tshuva and Landau were then expected to hold a combined 54% of the medical center.
Less than a month after the agreement was signed, Ministry of Health Director General Bar Siman Tov informed Clalit Health Services, implicitly but clearly, that he expected the health fund to retain control of the hospital. In a letter sent to Clalit, the ministry said it expected Clalit to control the volume of surgeries performed at the hospital in a way that would give an advantage to public medicine, as well as to control the hospital's board of directors.
Landau's deal with the Wiz founders included an arrangement under which they would grant him the use of their voting rights on the board of directors even after the transaction. As a result, Landau would have remained the controlling shareholder despite selling 10% of his stake. This also contributed to the decision by the Ministry of Health and Clalit to exercise the right of first refusal and ensure that Clalit gained control.
Clalit, which insures more than 50% of Israel's population, currently serves as an anchor for bringing patients to the hospital. Herzliya Medical Center performs about 26,000 surgeries a year, including cardiac, neurosurgical and oncological procedures. It also operates catheterization and fertility units and is considered one of Israel's largest private medical institutions in these fields. The hospital was established in 1982 and employs about 600 people.
The real estate on which the hospital operates, covering a built-up area of 9,000 square meters, belongs to Landau and will remain his property. Clal Insurance invested in the company in 2016, when it purchased 10% at a valuation of about NIS 700 million.
