Clal Insurance Enterprise Holdings Ltd. rose to the highest level in almost two weeks after the insurance holding company said a unit of billionaire Warren Buffett’s Berkshire Hathaway Inc. agreed to acquire a U.S. unit.
The shares gained 3.7 percent to 35.83 shekels, the highest since Aug. 7, at the close in Tel Aviv. IDB Holding Corp., which holds a stake in Clal Insurance via its IDB Development Corp. unit, surged 7.4 percent to 17.80 shekels.
The Berkshire Hathaway unit will pay $221 million for Clal U.S. Holdings Inc., which owns Guard Financial Group Inc., according to a filing with the Tel-Aviv Stock Exchange today. In December, Clal Insurance completed the sale of its stakes in Broadgate Underwriting Ltd. and Broadgate Underwriting 2010 Ltd. to Torus Insurance Holdings Ltd. for about 12 million pounds ($18.8 million).
“This frees up cash for potential dividends,” Terence Klingman, head of research at Psagot Investment House Ltd., said referring to the Berkshire deal. “The company started to expand internationally a few years ago, but now it is back to its core business in Israel.”
Buffett, chairman of Omaha, Nebraska-based Berkshire, paid $4 billion in 2006 for an 80 percent stake in Israel-based toolmaker Iscar Metalworking Cos.
Clal Insurance is 55 percent held by IDB Development, according to data compiled by Bloomberg. IDB Development in July sold a stake in Clal Industries and Investments Ltd. to Access Industries Holdings Inc.