China Communications Construction Company, a state-owned Chinese builder, has made a non-binding offer to buy IDE Technologies, a water-desalination engineering company jointly owned by Israel Chemicals and Delek Group, for $650 million.
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CCCC, one of at least three groups to submit offers for the company, is carrying out due diligence in preparation for making a final bid.
IDE went on the block several weeks ago. The sale process, which is being managed by UBS, calls for final bids to be submitted by October-November.
Israel Chemicals has sought to sell IDE for some and once tried to list its shares in London on the grounds that its business of developing, building and operating desalination and industrial water treatment plants is not part of either partner’s core business. Both partners have been uncertain about proceeding with a sale now, when IDE’s order backlog is thin and the company’s valuation low.
Sources said the two will make a decision after the final bids are in. If they opt to move forward, an agreement should be signed in the end of the year.
CCCC’s interest in IDE comes amid heightened interest in Israeli companies. Earlier in the week, a Chinese consortium bought the online gambling company Playtika for $4.4 billion and last month China National Chemical Corporation bought out its Israeli partner in the agrochemical company Adama for $1.4 billion.
IDE is a leading player in the desalination industry, building about 320 facilities and controlling about 20% of the market. The main barrier to growth is that Arab states that refuse to do business with it account for about 60% of worldwide use of desalinated water.