Clal Insurance Enterprise Holdings Ltd. gained the most this month after a report that American International Group Inc. is in talks to buy the Israeli insurer. Bonds of parent IDB Development Corp. climbed.
Shares of the nation’s third-biggest insurance company rose 2.4 percent, the most since June 30, to 60.55 shekels at 1:23 p.m. in Tel Aviv. The yield on IDB Development’s 1.5 billion shekels ($411 million) of 4.5 percent bonds due June 2018 retreated 97 basis points, or 0.97 of a percentage point, the biggest drop on a closing basis since June 10, to 7.77 percent.
New York-based AIG made a non-binding proposal to buy IDB’s stake for 4 billion shekels, Calcalist reported today, without saying where it got the information. IDB Development last month said it hired Benfield Securities to find a buyer for Clal, in which it owns a 55 percent stake. An Israeli court last month gave IDB Chairman Nochi Dankner until Aug. 22 to sell a stake in Clal. IDB and AIG Israel declined to comment on the report.
“Offers for the insurance unit are good news for IDB and its bondholders,” Terence Klingman, head of research at Psagot Investment House Ltd., said by phone from Tel Aviv.
Dankner’s IDB Holding Corp. is struggling to meet payments on about 2 billion shekels of debt. Argentine businessman Eduardo Elsztain this week decided against further investment in IDB Holding after the company’s debtholders last week approved a restructuring plan that would convert debt into shares of IDB Development.
“Any offer for Clal will be subject to careful assessment of the regulatory environment in Israel, which has been uncertain and very unfriendly to shareholders,” Klingman said.
Israel Chemicals Ltd., a takeover target for Potash Corp. of Saskatchewan Inc. earlier this year, said in May that uncertainty surrounding government policies risks is driving away foreign investors.
Australia’s Woodside Petroleum Ltd. is withholding a A$750 million ($691 million) payment for Israel’s Leviathan project in the Mediterranean Sea after the Cabinet set aside 60 percent of new found gas reserves for domestic consumption, Australian Associated Press reported this week.
Clal Insurance Enterprises, formed in 1987, is involved in property/casualty insurance including automobile, long term savings, health insurance, credit financing and financial services. The IDB Group owns 55 percent of its shares, while Bank Hapoalim holds 10 percent, with the rest held by the public at large. Clal’s shares are traded on the Tel Aviv stock Exchange.
The group owns insurance agencies, pension funds, provident funds, advanced training funds, loan companies and financial asset management companies. The group has about 4,000 employees and works with 2,000 insurance agents.
The Clal Group says it holds a 19 percent share of the insurance market and manages hundreds of billions of Shekel-denominated assets.
Clal Insurance Enterprises Holdings is rated A- by Standard & Poor’s Maalot, according to the insurer’s website.
Editors: Daliah Merzaban, Robert Lakin