TEL AVIV Aug 26 Israel's Harel Insurance Investments and Financial Services has agreed to buy the life and health insurance activities of Eliahu Insurance for 210 million shekels ($52 million).
The deal will help pave the way for businessman Shlomo Eliahu, owner of Eliahu Insurance, to acquire control of Israel's largest insurer, Migdal Insurance. In March Generali agreed to sell a 69.1 percent stake in Migdal to Eliahu for $1.1 billion.
Harel, one of Israel's largest insurers, said in a statement on Sunday the Eliahu deal is due to close on Jan. 1, 2013, when it will pay 100 million shekels in cash and 110 million in an issue of deferred notes.
The deal is conditioned upon Shlomo Eliahu acquiring control of Migdal from Generali, Europe's No. 3 insurer, as well as regulatory approval.
Eliahu is negotiating financing for his deal to acquire control of Migdal with a number of institutions, including Harel, the company said.
Last month Bank Leumi, one of Israel's largest banks, agreed in principle to lend Eliahu 2 billion shekels to help fund his Migdal purchase. Leumi owns 9.8 percent of Migdal.
Eliahu's life insurance business has assets of nearly 1.8 billion shekels and had pretax profit of 10.6 million shekels in the first quarter of 2012.
($1 = 4.025 shekels)
(Reporting by Tova Cohen)