Arison Buys Out U.S. Partners at 5% Discount

Nochi Dankner had offered to buy them out at a 20% discount

Shari Arison, the biggest controlling shareholder in Bank Hapoalim, has increased her interest in Israel's largest bank and ensured herself complete control of the decision-making process.

The American shareholders ? the Shusterman family, Len Abramson and Michael Steinhardt - agreed on Thursday night to sell Arison their combined 5.5% interest in the bank, giving her 75% of the controlling shares.

The deal remains contingent on the approval of the Bank of Israel.

Arison is paying $170 million cash, or 60% of the consideration in the deal. The other 40% will be paid in the form of non-controlling shares in Bank Hapoalim.

The deal was signed according to the market value of the shares at the time of closing.

The 30 million regular shares the foreigners received from Arison weer worth $140 million on Thursday, bringing the deal to $310 million.

Regular shares can be sold to any buyer at any time, in contrast to controlling shares. Controlling shares in a bank cannot be sold without permission from the central bank, subject to a stringent examination of financial stability and an in-depth review of the buyer.

The cash value of the controlling shares was set at NIS 18.25 per share.

In contrast, Nochi Dankner had offered NIS 16.27 per share a week earlier. The Arison deal values the controlling shares at 5% below their market value, while Dankner had offered 20% below market.

Financial market sources believe central bank regulators will be forced to consider whether they are willing to allow a single shareholder to make all substantial decisions at the bank.

The Bank of Israel has determined in the past that decision-making requires a 75-percent majority of the controlling shares, which ensures at least one other shareholder on board with the major shareholders' vote. The central bank may now expand this condition to require that Arison's partner agree to major decisions.

Hapoalim chair Shlomo Nehama had held talks in recent months to buy some of the Dankner controlling shares. However, the Bank of Israel said he would have to waive his chairmanship should he make the purchase.