Billionaire Arison sells $930mn stake in Israel’s Bank Hapoalim

Bloomberg

Billionaire Shari Arison agreed to sell almost 10 percent of Bank Hapoalim Ltd. in what could
become one of the biggest deals in
Israel’s financial sector.
Arison signed a non-binding agreement to sell 49 percent of her investment and philanthropy arm, Arison Holdings 1998 Ltd., to unidentified North America-based institutional investors and an investment firm, according to a Tel Aviv Stock Exchange filing. The holding company owns just over 20 percent of Hapoalim. The total value of the sale wasn’t disclosed.
The deal pegs Hapoalim, Israel’s largest bank and the holding company’s most valuable asset, at 24.82 shekels per share. That translates to a purchase price of 3.25 billion shekels ($930 million), according to Bloomberg calculations, and represents a three percent premium over the closing price on Sept. 19, the last day of trading in Israel before the Rosh Hashana holiday. Hapoalim shares were up 2 percent, the most in one month, to 24.62 shekels at 12:10 p.m. in Tel Aviv. Shikun & Binui Ltd., a construction company and unit of Arison Holdings, climbed as much as 1.4 percent before paring gains. The deal is subject to
approval by various regulators,
including the Bank of Israel.
Meddlesome Officials
Some of Israel’s biggest financial assets are up for sale as a result of reforms in the banking sector and a law passed in 2013 to break up concentrated business interests. But dealmaking has been slow, with some potential buyers who shied away citing Israel’s current business environment and meddlesome government officials. Others, namely potential Chinese investors, have seen their bids torpedoed by regulators, who worry about placing public funds in their hands.
“It’s clear that it isn’t easy to sell large stakes in banks and financial assets,” said Meir Slater, head of research at Bank of Jerusalem Ltd.
Arison, now 60, inherited stakes in Hapoalim and Shikun & Binui in 1999, when her father, Ted Arison, died. With a net worth of $7 billion, she is the second-wealthiest person in Israel, according to the Bloomberg
Billionaires Index.
Arison has been trying for years to sell down her controlling stake in Hapoalim. That she ultimately agreed to sell a significant piece of her holding company indicates investors needed more than just a large stake in Hapoalim to clinch a deal, Slater said. The agreement also gives the buyers rights to name
directors to the boards at Arison
Holdings and Hapoalim.

Growing Dividends
Another Israeli billionaire, Yitzchak Teshuva, has tried numerous times to sell Phoenix Holdings Ltd., one of the country’s largest insurers. Argentine businessman Eduardo Elsztain has been seeking a taker for his Clal Insurance Enterprises Holdings Ltd., and is now forced to sell the stake in chunks on the open market. A potential merger between two smaller Israeli banks faces opposition from lawmakers.
Though selling control of Israeli banks has been difficult, the companies have improved their performance in recent years. The major lenders have grown their profits, driven by cost-cutting measures and Israel’s economic expansion, and began boosting dividend payouts this year. Israel’s main banking index rose to a record high last month and remains close to that level.
Hapoalim distributes 40 percent of its quarterly profit to shareholders, the most among Israeli banks. Management has plans to increase the amount to 50 percent, but is waiting for American regulators to conclude an investigation into whether Hapoalim helped private clients evade taxes in the U.S.