A few weeks before the deadline set by Supervisor of Capital Markets, Insurance and Savings Dorit Salinger for IDB Development Corporation Ltd. (TASE:IDBD), controlled by Eduardo Elsztain, to sign a binding agreement to sell its holdings in Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), IDB has announced that "in order to decide on the chosen bid in the first half of December," its board of directors reduced the candidates for the acquisition to two Chinese groups: Macrolink Group, and Tianan Insurance and JT Capital, headed by businessman Li Haifeng, who has already sought to acquire a controlling interest in Clal Insurance, but failed to obtain approval from the Ministry of Finance.
IDB Development plans to conclude the terms for acquiring the controlling shares in Clal Insurance in the coming weeks. The management rights in Clal Insurance have been taken away from IDB Development and given to a trustee on behalf of the Ministry of Finance, Moshe Tery.
The IDB board of directors has not yet given up on the third group to submit a monetary bid - Shanghai Gongbao Business Consulting (SG), and has asked it for further clarifications. IDB Development said that SG had announced a change in its consortium formed for the Clal Insurance acquisition.
A few weeks ago, IDB Development announced that the Macrolink bid was the lowest, reflecting a value similar to Clal Insurance's shareholders' equity as of the end of the first half of the year (NIS 4.5 billion). The bid by Tianan and Haifeng, on the other hand, reflected a company value of NIS 5 billion. IDB Development has now said that Macrolink revised its bid to equal Clal Insurance's equity as of the end of 2015 (or its equity on the date the deal is completed, if that amount is lower than the equity at the end of 2015).
As of now, there is no certainty that an agreement will be signed with any of the bidders, or that a deal for the sale of IDB Development's holdings in Clal Insurance will be completed. If IDB Development wishes to avoid a sale of its holdings other than through a sale of the controlling interest (in order to avoid losing a control premium in the sale), however, it must sign a binding agreement this year. If and when IDB Development signs an agreement with any of the potential buyers, the buyer will need approval from the Supervisor of Capital Markets, Insurance and Savings by mid-2016 - something that cannot be taken for granted, and could end in a refusal.
Published by Globes [online], Israel business news - www.globes-online.com - on November 25, 2015
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