Share watchdog pokes holes in Ofers' ship deal with Zim
The Israel Securities Authority declared Tuesday that Bank Leumi is an interested party in the Zim shipping company's purchase of 12 ships - the largest transaction for which the authority has ever made such a declaration.
An interested party is one who has a controling stake in one company that buys from, or sells to, another company over which he has similar control.
Zim, controlled by Sammy Ofer, is buying 12 ships from the Ofer Brothers group for $820 million. The ISA claims that the Ofers' businesses owe Bank Leumi NIS 5 billion, which gives the bank a personal interest in the transaction. However, what turns the deal into an one involving an interested party is that Leumi also owns a 20 percent stake in The Israel Corporation, which owns 98 percent of Zim.
The law demands that in substantial insider transactions, an ordinary majority of shareholders cannot suffice: the deal requires the support of at least a third of the shareholders present at a meeting who are unaffiliated with the deal. Tuesday's declaration by the ISA means that Ofer must now find a majority among the other "noninterested" shareholders of the Israel Corp. to approve the Zim ship deal.
Leumi supported the deal at an Israel Corp. board meeting six weeks ago. The company said Leumi would not be financing the transaction, although no details of the deal, including its financing, were supplied. Market sources have criticized the deal since it appears better for the Ofers than for Zim.