Delek Group Ltd. (TASE: DLEKG) today confirmed yesterday's report by "Globes" that it was in talks to sell its US insurance subsidiary Republic Companies Group Inc.
In a notice to the Tel Aviv Stock Exchange (TASE), Delek Group said that subsidiary Delek Finance US Inc. signed on February 3 a non-binding memorandum of understanding with a third party for the sale Republic Companies Group. The third party has begun preliminary due diligence, and if it goes ahead with full due diligence, Delek believes that a deal can be closed within two months. The company did not disclose the name of the third party.
Delek Group added that no price tag has been set, but that it will probably be on the basis of Republic Companies Group's shareholders' equity, plus adjustments determined by the parties. "Globes" reported that asking price is $300 million.
Delek Group, controlled by Yitzhak Tshuva, has to improve its covenants with the banks. Although the company has cash, it needs to improve its debt to balance sheet ratio.
Delek Group's share fell 1% in morning trading to NIS 306.90.
Published by Globes [online], Israel business news - www.globes-online.com - on February 18, 2009
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