Canada's Aecon Inc. (TSX: CAN) will report a $30 million capital gain on the sale of its stake in the franchisee of Road 6 (the Cross-Israel Highway or Yitzhak Rabin Highway). On Thursday, Aecon announced that sale of its shares in franchisee Derech Eretz Highways (1997) Ltd. to a consortium led by Israel Infrastructure Fund (IIF) for $77.8 million (about NIS 290 million). IIF will acquire Aecon's 25% stake in Derech Eretz and its 33% stake in the construction joint venture The deal reflects a company value of almost NIS 1 billion for the project.
Aecon's partners, Africa-Israel Investments Ltd. (TASE:AFIL) and Shikun u'Binui Holdings Ltd. (TASE: SKBN), in Derech Eretz, have to approve the sale. Both companies, each of which owns 37.5% of Derech Eretz, have first refusal and tag-along rights. The deal also requires regulatory approval.
"Globes" first reported last week that IIF, controlled by Harel Insurance Investments and Financial Services Ltd. (TASE: HARL), was in preliminary talks with Africa-Israel for its stake in Derech Eretz.
Aecon chairman and CEO John Beck said, "After 17 years of working with our local partners, we decided to sell the cumulated value of our share in the road. We were pleased to invest in Israel, and I hope that we demonstrated that it is not only possible to invest, but to make a profit."
The deal does not include Aecon's 30.6% stakes in Derech Eretz Highways Management Corporation Ltd., the operator of the Cross Israel Highway, and Aecon's stakes in several Derech Eretz affiliates, which operate Road 431, the Carmel Tunnels, and a road maintenance project in the north.
Published by Globes [online], Israel business news - www.globes-online.com - on July 18, 2010
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