- Israeli firm said it was in talks with U.S. company Thursday
- Deal said to value Phoenix stake at 1.7 billion shekels
Delek Group Ltd., Israel’s largest energy company, has signed a non-binding letter to sell a stake in its insurance unit to AmTrust Financial Services Inc., according to people familiar with the matter.
The deal values Delek’s 52 percent stake in Phoenix Holdings Ltd. at 1.7 billion shekels ($434 million), one of the people said, asking not to be named as the deliberations are private. Delek agreed to 30 days of exclusive talks and that the buyer would pay half of the sale price in cash, the company in a statement Thursday. Delek didn’t name the bidder.
A spokeswoman for New York-based AmTrust declined to comment.
The talks come after a deal to sell the business to China’s Fosun International Ltd. collapsed. Delek is focusing on its core business and is selling units unrelated to developing the natural gas fields off Israel’s coast. AmTrust bought U.S. insurer Republic Companies, Inc. from Delek last year for $233 million.
Details of the agreement were first reported in TheMarker, a Hebrew business daily.
Phoenix shares rose 4.8 percent, the most since January 2015, to 8.762 shekels, after earlier gaining as much as 11 percent. Delek gained 2.3 percent.
Israel’s largest-listed insurance companies rallied on the potential sale, including Clal Insurance Enterprises Holdings Ltd., whose attempted sale to a separate Chinese company unraveled last month.
“The purchase price reflects a big premium to the average book value in the industry,” said Meir Slater, the head of research at Bank of Jerusalem Ltd. in Tel Aviv. “The potential deal is also increasing bets that the other Israeli insurance providers up for sale, such as Clal Insurance, will be able to find buyers.”
Israel’s Finance Ministry gave IDB Development Ltd. until Jan. 7 to sell its majority stake in Clal to a buyer before having to unload it via the bourse or private transactions. IDB has asked to extend this deadline another eight months, TheMarker reported on Jan. 28.
Clal shares climbed 2.6 percent to 42.57 shekels, the highest since Feb. 1.