ADNOC, BP Suspend $2B Deal To Buy Stake In Israel’s NewMed. Here’s Why

Abu Dhabi National Oil Company (ADNOC) and British oil and gas firm BP have suspended a $2 billion offer to buy a 50% stake in Israeli gas producer NewMed Energy due to uncertainty in the region, according to a statement released Wednesday.

Deal suspended

NewMed said all parties were in agreement to stall the negotiations, but added that despite the pause, ADNOC and BP have reaffirmed their interest in the proposed transaction.

“The process will remain suspended until such time as discussions resume or the process is terminated,” NewMed said. “There can be no certainty that discussions will resume or that an agreement will be reached in the future, nor as to the terms of an agreement should one be reached.”

Shares of NewMed fell 4.94% at 5:02 pm GST following the announcement.

A number of countries and businesses in the region have been impacted due to the ongoing conflict between Israel and Hamas in the Gaza Strip.

ADNOC-BP offer

The ADNOC-BP deal was announced in March last year. The deal would involve acquiring NewMed's free-floating shares and taking the company private.

The British major said it intended to form a joint venture with ADNOC that would focus on gas development in international areas of mutual interest, including the East Mediterranean. BP added that the proposed transaction with NewMed would be a significant first step in establishing the joint venture.

BP and ADNOC plan to acquire the 50% NewMed stake by buying roughly 45% of its free-floating stock and part of Delek Group’s shares.

The offer price is $3.38 (12.05 ILS) apiece, reflecting a 72% premium above the pre-deal market price, valuing the company at about $3.97 billion. The proposed transaction is worth around $2 billion, based on calculations by Forbes Middle East.

NewMed assets

NewMed is the largest stakeholder in the Leviathan offshore field, operated by Chevron, which produces 12 billion cubic meters (bcm) of gas that are supplied to Israel, Egypt and Jordan.

The field's partners are planning to expand its production further and are exploring plans for a liquefied natural gas (LNG) terminal to boost exports further.

NewMed also owns a 30% stake in Aphrodite, located off Cyprus.

UAE-Israel ties

The UAE and Israel normalized ties in September 2020 as part of what was known as the Abraham Accords. The countries said the political deal would lead to billions of dollars of investment in Israel.

In May 2022, the UAE and Israel signed a landmark agreement to strengthen trade and investment between the two countries. The free trade deal was Israel’s first with an Arab country.