Clal Industries and Investments Ltd. advanced the most in more than two months after IDB Development Corp. signed an agreement to sell a stake in the investment company to Access Industries Holdings Inc.
Shares of Tel Aviv-based Clal increased 3.8 percent, the most since March 1, to 11.86 shekels at the close in Tel Aviv. IDB Holding Corp. gained as much as 18 percent before closing 1.7 percent higher. The yield on IDB Holding’s 5.1 percent bonds due December 2020 fell for the first time in more than a week, dropping 254 basis points, or 2.54 percentage points, to 34.43 percent. The TA-25 benchmark index retreated 0.8 percent.
IDB Development Corp. signed a deal to sell 49.9 percent of Clal Industries in an all-cash transaction that values the company at 2.55 billion shekels ($667 million). Standard & Poor’s Maalot cut its ratings on IDB Holding and IDB Development Corp. last week to the lowest and third-lowest investment grades, respectively, citing “weak” funding levels.
“This is a great deal for all sides concerned,” said Zach Herzog, head of international sales at Psagot Investment House Ltd. in Tel Aviv said by phone today. “It is a breath of air for IDB and the buyer is buying a quality asset.”
‘Injects Some Calm’
Israeli billionaire Nochi Dankner, who controls IDB Holding, Discount Investment and several other companies, will honor all his debt to investors and isn’t considering asking for a so-called debt haircut, he said in an interview on Channel 2 news late yesterday. Dankner said he’s willing to sell some of the companies under his control provided the offer was sufficiently attractive.
Clal’s purchase price represents a 41.7 percent premium to the current share price, IDB Development said in a PR Newswire statement today.
“The deal gives Dankner cash he desperately needs to pay off his bondholders and injects some calm into the market around both equities and bonds,” Herzog said. IDB Holding’s Clal Insurance Enterprise Holdings Ltd. may be sold next, in light of the expected law requiring holding companies to simplify their corporate structures, he said.
Discount Investment Corp., in which IDB Development has a 73.64 percent stake, dropped 1.1 percent to 8.80 shekels, the lowest level since January 1995, when the shares were listed in Tel Aviv.