Business in Brief: Government to Start Negotiations With Elbit Over IMI Sale

6.2 billion shekels in bonds sold in July; Bourse legislation to get Knesset hearing this week after all; Banks lead Tel Aviv market higher as Teva Pharmaceuticals shares tumble.

Stock prices flash on an electronic screen displaying world clocks at the Tel Aviv Stock Exchange (TASE) in Tel Aviv, Israel, on Thursday, Dec. 11, 2014.
Bloomberg

Government to start negotiations with Elbit over IMI sale

The Israeli Corporations Authority decided Monday to move ahead with the privatization of Israel Military Industries and open negotiations with Elbit Systems on a final price, sources involved in the process said.

The decision was made in the face of opposition from the treasury accountant general and legal adviser because Elbit was the only company to offer a bid in last February’s tender to privatize IMI after the U.S. company Flextronics dropped out.

The start of negotiations had been delayed in order for ICA officials to get newer valuations for IMI and for the state comptroller to examine how the privatization process was conducted. Critics are concerned that Elbit will bid low and use IMI to strengthen its bargaining power versus the army, which it already serves as its the biggest defense gear supplier.

Elbit shares were down 0.85% at $99.76 in late afternoon trading in New York. (Ora Coren)

6.2 billion shekels in bonds sold in July

Investors threw risk worries aside and snapped up more than 6.2 billion shekels ($1.6 billion) of bonds sold at super-low interest rates, mainly by real estate companies, during July, figures from the Tel Aviv Stock Exchange and S&P Maalot released Sunday showed.

With banks and others absent from the market last month, the July figure was only for non-financial companies and was more than twice the monthly average for the first half of the year.

“Many companies completed offerings at very low interest rates and enjoyed excess demand despite the uncertain global environment, especially against the background of the Brexit vote’s impact,” said Ronit Harel Ben-Zeev, S&P’s CEO.

The two biggest bond sales were a 2.2 billon shekel issue by Azrieli Group and a 1.1 billion issue by Delek Group, but most of the sales were by relatively small property companies. Some 10% of capital raised was by borrowers with no credit rating. (Uri Tomer and Michael Rochvarger)

Bourse legislation to get Knesset hearing this week after all

Legislation that would allow the Tel Aviv Stock Exchange to become a for-profit company will move forward a little this week before the Knesset adjourns for its summer break.

Finance Committee deliberations on the draft law were delayed last week due to opposition filibustering, but after an appeal by Prof. Shmuel Hauser, chairman of the Israel Securities Authority and a prime backer of the law, on Monday it was suddenly restored to the panel’s agenda for Tuesday.

However, it will only be a preliminary debate and the law won’t move to the full Knesset for the second and third readings before it can become law until lawmakers return for the winter session. Hauser warned that unless the committee began deliberations now, approval of the law would be delayed for months. The law is designed to end bank control of the TASE and make the bourse more competitive and better managed. (Zvi Zrahiya)

Banks lead Tel Aviv market higher as Teva Pharmaceuticals shares tumble

Bank stocks led the Tel Aviv Stock Exchange higher Monday in relatively brisk trading.

The TA-25 and TA-100 indices both ended more than 0.2% higher at 1,461.52 and 1,275.68 points, respectively, as some 1.53 billion shekels ($400 million) in shares changed hands. Bank Leumi powered 2.3% higher to end at 14.07 shekels and Bank Hapoalim was not far behind on a 1.85% rise to 19.84.

Teva Pharmaceuticals led the most actives by a wide margin, accounting for 28% of the day’s total turnover, but ended down 1% at 203.20. The drop came after a 2.5% decline the day before. Africa Israel dropped 2% to 1.25 after extending the deadline for approving the sale of its holdings in AFI Development by nine days, to August 10, to get the green light from securities regulators in Cyprus.

In foreign currency trading, the dollar weakened close to 0.6% to a Bank of Israel rate of 3.806 — the lowest since May 13. (Omri Zerachovitz)