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Clal Insurance Jumps on Report AIG Seeking Stake: Tel Aviv Mover

Clal Insurance Enterprise Holdings Ltd. gained the most this month after a report that American International Group Inc. is in talks to buy the Israeli insurer. Bonds of parent IDB Development Corp. climbed.

Shares of the nation’s third-biggest insurance company rose as much as 3.2 percent, the most since May 28, before gaining 1.7 percent to 60.14 shekels at the close in Tel Aviv. The yield on IDB Development’s 1.5 billion shekels ($411 million) of 4.5 percent bonds due June 2018 retreated 66 basis points, or 0.66 of a percentage point, the biggest drop on a closing basis since June 10, to 8.08 percent.

New York-based AIG made a non-binding proposal to buy IDB’s stake for 4 billion shekels, Calcalist reported today, without saying where it got the information. IDB Development last month said it hired Benfield Securities to find a buyer for Clal, in which it owns a 55 percent stake. An Israeli court last month gave IDB Chairman Nochi Dankner until Aug. 22 to sell a stake in Clal. IDB and AIG declined to comment on the report.

“Offers for the insurance unit are good news for IDB and its bondholders,” Terence Klingman, head of research at Psagot Investment House Ltd., said by phone from Tel Aviv.

Dankner’s IDB Holding Corp. is struggling to meet payments on about 2 billion shekels of debt. Argentine businessman Eduardo Elsztain this week decided against further investment in IDB Holding after the company’s debtholders last week approved a restructuring plan that would convert debt into shares of IDB Development.

Regulatory Environment

“Any offer for Clal will be subject to careful assessment of the regulatory environment in Israel, which has been uncertain and very unfriendly to shareholders,” Klingman said.

Israel Chemicals Ltd., a takeover target for Potash Corp. of Saskatchewan Inc. earlier this year, said in May that uncertainty surrounding government policies risks is driving away foreign investors.

Australia’s Woodside Petroleum Ltd. is withholding a A$750 million ($688 million) payment for Israel’s Leviathan project in the Mediterranean Sea after the Cabinet set aside 60 percent of new found gas reserves for domestic consumption, Australian Associated Press reported this week.

Jon Diat, an AIG spokesman, said the company doesn’t comment on rumors or speculation.

AIG reached a deal this year to acquire the 49.99 percent stake in AIG Israel that was held by Aurec Gold Investments Ltd. to expand in the country. In Israel, AIG sells personal coverage such as car insurance, as well as accident and health policies and life insurance.

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