Notwithstanding an order by the Peruvian regulator, Israel Corporation (TASE: ILCO) will not acquire Edegel SA (Lima: EDEGEL), after there was no response to its offer to purchase 3.47% of Edegel for over $60 million. Israel Corp's offer of 1.53 Peruvian new sols was 30% less than Edegel's share price on the Lima Stock Exchange of 1.99 new sols.
An offer to purchase is normally at a premium on a company's share price, rendering it worthwhile for shareholders. This time, Israel Corp. did not want the offer to be accepted, as it was forced on the company by the Peruvian regulator.
Israel Corp. operates in the Latin American energy market through Inkia Energy Inc., which it founded three and a half years ago, at an investment of over $500 million. Inkia has bought several companies in Latin America and the Caribbean, including 21.14% of Edegel, Peru's largest private electricity producer, which has a market cap of almost $1.8 billion.
Peru's National Supervisory Commission for Companies and Securities (CONASEV) ordered Inkia to make an offer to purchase the minority stake in Edegel's parent company and to publish an offer to purchase for 16.7% of Edegel. CONASEV said that, when Inkia acquired its stake in Edegel, it actually acquired joint control of the company.
Inkia rejected the demand, claiming, among other things, that it acquired the holding of Edegel's previous controlling shareholder, which had an exemption from this requirement. Inkia and CONASEV held talks on the issue and reached a compromise, under which Inkia would acquire only 3.47% of Edegel.
Israel Corp.'s share price fell 1.4% today to NIS 4,006, giving a market cap of NIS 31.27 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on March 9, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011