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At 9 P.M. on Tuesday, Nochi Dankner's cellphone rang. He excused himself from a meeting with representatives of Israel Salt Industries, where he is closing in on an acquisition deal, and stepped out of the room.

When Dankner failed to return within a few minutes, as expected, his negotiating partners realized that something serious was going on. Their attempts to lighten the mood in the room failed.

Dankner stepped back into the room some 20 minutes later to announce solemnly that the negotiations were over; the deal was off. He had just been informed that Shari Arison, the controling shareholder in Bank Hapoalim, was in talks to buy out her U.S. partners' 5.5 percent stake in the bank.

Dankner realized that Arison was not bluffing when she told him the day before that she would prefer him not to pursue his goal of acquiring a controling stake in Hapoalim. Because Dankner had announced at the start of the process that everything would be done by agreement, he beat a polite, if painful, retreat.

It all began last week, when Dankner contacted his cousins about purchasing their holdings in Israel Salt. Gil Dankner, the son of Nochi's uncle, David, was in charge of the negotiations.

The parties, each accompanied by counsel, were ready to meet by Friday. Nochi Dankner came with attorneys Yaakov Neeman and Ehud Sol.

Gil Dankner was accompanied by attorney Yoram Raved, whose offices in Tel Aviv's Europe House were to become the setting - four days of discussions later - for Nochi's announcement about the deal being off.

It was Shari Arison's regular lawyer, Pinhas Rubin, who handled the negotiations between his client and Nochi Dankner.

On Sunday, Nochi Dankner's IDB Group informed the Tel Aviv Stock Exchange of its talks to acquire a controling interest in Bank Hapoalim. The talks were being conducted on two separate channels, the completion of both of which were critical.

The first channel involved Nochi Dankner's acquisition of his cousins' 65-percent stake in Israel Salt, which, in turn, holds 6 percent of Bank Hapoalim - 3 percent common shares and 3 percent controling shares.

Dankner offered to buy out their holdings for about NIS 860 million - some 20 percent above market value before the Sunday announcement.

The second channel involved Nochi's efforts to pick up the 5.5 percent of Hapoalim shares held by Americans Leonard Abramson, the Schusterman family and Michael Steinhardt, who hold a controling stake in the bank. This would have given Dankner an 8.5 percent controling stake in Hapoalim, while Arison would have remained the senior partner with 11.5 percent.

Arison is thought to have agreed to these moves in principle; but immediately after IDB's announcement to the TASE, her advisors began to investigate Dankner's plans.

On Monday morning, when the parties began getting into the details of the deal, cracks opened up between Dankner and Arison over the meaning of "control:"

The redistribution of shares would have given Dankner veto power over Arison's decisions on senior appointments - including, above all, the retention of her close associate, Hapoalim chairman Shlomo Nechama.

After the Monday morning meeting, Arison's team concluded that it was not comfortable with Dankner gaining a controling interest.

Sources close to the talks said the team conveyed to Dankner the polite but firm message that Arison did not want him in the control room.

She made it clear that this was a business decision, not a personal one. Her team expected a formal announcement by IDB of its reversal on Monday evening - but was disappointed.

Other sources close to the talks said that Dankner had received contradictory and vague messages from Arison that spurred him to continue the negotiations with his cousins over the Israel Salt holdings.

With no announcement from IDB about the suspension of efforts to gain a controling stake in Hapoalim, Arison contacted the U.S. investors and told them she was interested in purchasing their shares.

Arison has first rights on these holdings, so even if the Americans and Dankner had reached a deal, she could have bought them out from under him.

It was at this stage that Dankner's cellphone rang, with a call from the Americans' attorney reporting on Arison's actions. This time, the message was loud and clear, forcing Dankner to suspend the negotiations.

According to a statement issued yesterday by IDB: "Since Shari Arison announced her decision not to settle for being [Bank Hapoalim's] largest and leading shareholder, and sought instead to be the sole controling shareholder, even expressing an interest in increasing her share in the controling stake, IDB decided to halt the negotiations. Nochi Dankner respects Shari Arison's decision."