China Communication and Construction Co. (CCCC) is the lead bidder for IDE Technologies Ltd., a leading Israel-based global desalination technology firm, with a $650-million non-binding offer, according to Israeli financial industry sources. 

At least two other bidders have reportedly submitted preliminary offers but were not identified.

IDE holds a 50% stake in Israel’s three largest desalination plants along the country’s Mediterranean coast at Ashkelon, Hadera and Soreq— the latter, at 150 million cu meters per year of water produced, is the largest reverse-osmosis plant in the world.

The company has focused its efforts in recent years abroad, heavily involved in development of desalination plants in China, India, Chile and Australia. 

In 2013, IDE, part of the team led by Poseidon Resources, won the tender to design the largest North American desalination plant, located in Carlsbad, Calif.; it will produce 54 million gallons per day of treated seawater. IDE also is the plant’s operator.

“A canny combination of state-of-the art energy-recovery technology with an external energy-offsetting program makes Carlsbad the first major infrastructure project in the state of California to completely neutralize its carbon footprint,” says industry publication Global Water Intelligence. “The carbon-offsetting program helped fund the regeneration of forest areas decimated by wildfires in 2007.”

But the largest potential market for desalination plants remains the Arab world, which currently is off-limits for the Israel-based company.

“The acquisition of IDE by a foreign company is likely to lift the limitations [it] has faced in entering Arab and Islamic countries, which have traditionally accounted for about 60% of the desalination business,” said Chen Herzog, chief economist at BDO Consulting and an expert on infrastructure.

He added that, in the case of CCCC, IDE would benefit from an even greater position in the rapidly expanding China market, in which the Israeli company already has made some inroads, as well as other markets in which desalination is being considered due to growing water shortages.

The Chinese company has been active in recent years in the Israeli market in project construction, including tunnels and a rail line in the Haifa area in northern Israel.

IDE also has branched out into the water treatment field. In March, the Israeli company and its Indian partner, VA Tech Wabag Ltd., won a $100-million contract in Chennai for construction, maintenance and operation of a 45-million-liter-per-day tertiary water treatment plant. 

The project will use ultrafiltration and reverse-osmosis technology to treat wastewater, then piping it to industrial plants dozens of kilometers away.

Last year, IDE’s two owners, Israel Chemicals and Delek Group, hired Swiss investment bank UBS to speed up the sale of the jointly owned company.

Both owners have been selling off non-core assets over the past few years to focus on their main activities. Delek Group now is focusing almost exclusively on the energy sector after major recent discoveries of gas fields offshore of Israel's Mediterranean coast.

The financial industry sources said final bids are due in the fall, with a final sale expected by the end of the year. IDE reported a net profit of $3 million on revenues of $173 million in 2015.