Government officials involved in the Bank Leumi privatization expressed optimism yesterday evening ahead of tonight's tender. They said they believed that at least two groups would submit bids to buy the controling interest in Leumi. The expected contenders are the Cerberus-Gabriel consortium and the IDB group headed by Nochi Dankner.
The statements stood in stark contrast to earlier assessments that no strategic investers would try to buy the shares with the intention to hold on to them, that any bids would be submitted by financial investors looking to buy up shares and then sell them in the stock market soon thereafter.
The officials believe that several bids will also be submitted by financial investors. As opposed to the projection regarding strategic investors, this was expected.
Three groups have expressed interest. Two of them, the Zuckerman-Safra-Lowy consortium and investor Bill Davidson, have apparently decided not to bid. The Zuckerman group withdrew over the weekend, expressing disappointment that the government would not be offering any discounts in the tender. Analysts had also expected the Cerberus group to bail out due to numerous technical difficulties it has encountered, such as receiving approval from U.S. banking regulators to take over Bank Leumi USA.
However, officials involved in the tender believe hedge fund Cerberus will be able to overcome its difficulties, and say it has seemed the most seriousness of all the potential buyers.
They also made the surprising suggestion that Nochi Dankner may compete in the tender. Dankner consulted last week with bank and insurance regulators about the possibility of biding for Leumi. IDB Holdings owns a stake in Clal Insurance, the second largest insurance company in Israel, and the Bachar Committee on capital markets reform recommended forbiding banks from owning more than 10 percent of any insurance company, and forbiding insurance companies from owning banks. Thus, it is clear that the IDB group will not be allowed to control both Leumi and Clal Insurance.
Experts had thought that IDB would prefer insurance over banking for strategic reasons. Moreover, just last weekend Clal Insurance bought up the provident and mutual funds belonging to Israel Discount Bank, with Dankner's approval. Still, it is unclear whether IDB has opted for Clal Insurance over Leumi, and the possibility the concern will submit a bid to make a strategic acquisition and not just a financial investment can't be ruled out.
Financier Shlomo Eliahu, who already owns 10 percent of Leumi, is also interested. Eliahu, however, is probably precluded from submitting a bid because he already holds a Leumi stake equivalent to the shares currently on current.
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