Tnuva sale to go ahead, Clal Insurance stalled

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The moment of decision nears in two big deals for the sale of the controlling interest to Chinese companies.

The moment of decision is nearing in two big deals for the sale of the controlling interest in Tnuva Food Industries Ltd. at a company value of NIS 8.5-9 billion and Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) at a company value of NIS 4.6 billion to Chinese companies. The sale of Tnuva by Apax Partners to Bright Food Group is apparently on the verge of being signed. In contrast, the sale of Clal Insurance by IDB Holding Corp. Ltd. (TASE:IDBH) to JT Capital Fund pte Ltd. and its partners is waiting for a decision by Supervisor of the Capital Markets, Insurance, and Savings Dorit Salinger.

"A deal is on the verge of being signed, and while not final, it can said with assurance that it will happen within days," said a source familiar with Tnuva negotiations said today. Another source added, "There is no signing yet, but there are intensive talks and optimism."

A delegation from Bright Food, including its CFO, has arrived in Israel and is engaged in intensive talks aimed at overcoming last minute obstacles. The previous delegation was headed by the company's dairy division.

The parties are reportedly discussing the makeup of Bright Food's payment for Tnuva: it will include a cash component, and the assumption of Apax's debt for Tnuva. Apax's partner in Tnuva's controlling core, Mivtach Shamir Holdings Ltd. (TASE:MISH), controlled by Meir Shamir, will apparently keep its stake, alongside Bright Food and the kibbutzim and moshavim that own the rest of the shares. Shamir has reportedly asked Bright Food for an option to sell his shares at the same terms as the deal with Apax.

Waiting for Salinger

As for Clal Insurance, its buyers are waiting for a clear sign from Salinger before the May 29 deadline for the deal with IDB, when JT Capital and its partners will have to pay IDB an additional NIS 150 million down payment. (Even if no deal is closed, IDB will have received NIS 300 million from JT Capital).

Both JT Capital on the one hand and the Capital Markets Department on the other hand are indicating that a decision is near. The Ministry of Finance's decision will be made against the stormy public debate over the sale of a key financial institution, which manages pensions, to a Chinese consortium.

The approval process for the sale of control in Clal Insurance by IDB to JT Capital has dragged on since late August 2013, when the deal was signed. As part of the review, the Ministry of Finance sent officials to China, and, so far as is known, the Chinese companies have made a strenuous effort to comply with the strict Israeli regulatory capital requirements. Market sources believe that the ministry has no problem approving the sale, but it will be in trouble if JT Capital insists on its professional requirements.