Battery Ventures has acquired 17% of Direct Insurance Ltd. from Direct IDI Holdings Ltd. (TASE: DIFI) for NIS 124-136 million, reflecting a company value of NIS 730-800 million, including up to NIS 12 million in milestone payments. The companies expect to close the deal during the second quarter of 2012.
Under the companies signed the letter of intent in July 2011, Battery Ventures was to acquire 20% of IDI Insurance for NIS 160 million, giving a company value of NIS 800 million.
If IDI Insurance is sold or holds an IPO within the next seven years from the closing of the sale, at a company value equal to or higher than 2.3 times its shareholders' equity, IDI Holdings will receive an additional NIS 6 million. If the sale of IPO is held at a company value exceeding three times IDI Insurance's shareholders' equity, IDI Holdings will receive NIS 12 million. IDI Insurance's shareholders' equity was NIS 315 million at the end of September 2011, which means that the company value for the additional payment will have to increase to NIS 725 million, and NIS 945 million, respectively.
When the deal is closed IDI Insurance will adopt a dividend policy to distribute at least half of its annual profits as dividends. IDI Holdings estimates that it will report a capital gain of NIS 70 million on the sale.
IDI Holdings' share price fell 0.8% by mid-afternoon to NIS 1.22, giving a market cap of NIS 65 million.
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2012
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