Employers Holdings in talks to buy Clal Insurance's US unit

Employers Holdings Inc. (NYSE: EIG) is interested in acquiring Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) subsidiary Clal US Holdings Inc., specifically Guard Insurance Group Inc. In a filing with the US Securities and Exchange Commission (SEC), Employers Holdings said that it was "currently engaged in due diligence on an exclusive basis.

Employers Holdings specializes in insurance for small businesses in the US, the same field that Guard operates in. It added, "Once diligence is completed, the Company intends to engage in further discussions with Clal to determine whether mutually acceptable terms, including an ultimate purchase price, can be achieved that, among other things, reflect the then current state of financial markets and other economic conditions."

Employers Holdings said that it has submitted a non-binding offer of $312 million for Clal US, subject to adjustments. The acquisition would include all of Clal US's shares and the assumption of its $25 million in outstanding trust preferred securities.

Earlier this month, Clal Insurance announced that it was in talks with a third party for the sale of Clal US, and if a deal was closed, that it would report a pretax capital gain of NIS 231-261 million. Clal Insurance is also in talks for the sale of its UK operations, Broadgate Underwriting Ltd., which is syndicated with Lloyds of London.

Clal Insurance is reportedly selling Guard and Broadgate as part of the takes for its sale by Nochi Dankner-controlled IDB Holding Corp. Ltd. (TASE:IDBH) to Pan-European Permira Funds LLC, which apparently is not interested in Clal Insurance's international operations if it acquires the company. Clal Insurance also reportedly wants to reap profits and focus on its more profitable core businesses in Israel. It is not yet known if IDB and Permira will close a deal.

Clal Insurance acquired Guard in 2007 at a value of $120 million. At the time, Guard was in the accident and health insurance business. When Guard was founded in 1982, it operated in 27 US states, and it is currently licensed to operate in 46 US states.

Clal Insurance's share price fell 1.4% by mid-afternoon to NIS 65.98, giving a market cap of NIS 3.7 billion. Employers Holdings has a market cap of $420 million.

Published by Globes [online], Israel business news - www.globes-online.com - on August 24, 2011