Shlomo Eliahu will acquire Migdal for only €705 million due to the sharp fall in the insurance company's share price.
Shlomo Eliahu has received a discount in his acquisition of Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL). Migdal announced today that the date for completion of the deal has been postponed and that Eliahu will now only pay Generali €705 million for its 69.1% stake, 13.4% less than originally agreed, due to the fall in the Israeli insurance company's share price. If the deal is not completed by next month then Eliahu will pay an extra €125 million to Generali.
On March 7, Eliahu signed a deal to pay NIS 4 billion (€835 million) for the 69.1% stake of Migdal held by Italy's Assicurazioni Generali SpA (BIT: GASI). The deal was subsequently lowered to €814 million because of a dividend paid by Migdal a technical adjustment.
When the deal was signed it represented a 13% premium on Migdal's share price. But since then the share price has fallen sharply along with all of insurance companies and the price now represents a 40% premium. The fall was due to Ministry of Finance reforms in actuarial calculations of life expectancy that influences Migdal and other insurance companies results. This is what has led to the latest adjustment in the price of the deal.
Published by Globes [online], Israel business news - www.globes-online.com - on September 6, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012
Ron Stein and Stella Korin-Lieber