Nochi Dankner's Coming Home to Bank Hapoalim

Shari Arison: I'll still be the No. 1 at the bank

Nochi Dankner, the man behind the IDB (TASE: IDBH) group, is looking at another gigantic investment. With Cellcom under his belt, now he's looking at Israel's biggest bank.

Dankner is maneuvering to buy a substantial interest in Bank Hapoalim (TASE: POLI), through two transactions being negotiated simultaneously. If his moves succeed, he will control the bank together with Shari Arison, the billionaire heiress of Ted Arison. He would also have to sell his controlling interest in Clal Insurance (TASE: CLIS), under anti-competition rules.

Capital market sources point to Russian-Israeli real estate and diamond baron Lev Leviev of Africa Israel (TASE: AFIL) as a potential buyer for Clal Insurance, if the deals come through.

Arison is in the know about the negotiations, and has reportedly given them her blessing.

Through IDB Development Corporation (TASE: IDBD), Dankner is negotiating to buy the Dankner family's 65% interest in Israel Salt Industries (TASE: SALT), which owns a controlling interest in Bank Hapoalim.

Meanwhile, he is also in talks to buy Bank Hapoalim shares held by foreign investors, amounting to 5.5%. These are shares held by Michael Steinhardt, Len Abramson and the Shusterman family.

Salt Industries owns 6% of Bank Hapoalim, of which half are standard shares and half are controlling shares. If both moves succeed, Dankner will own 8.5% of Bank Hapoalim's controlling share capital, plus 3% of its free float, which is irrelevant to the controlling interest.

IDB Development's potential investment in the shares should come to about half a billion dollars.

Dankner would have to sell Clal Insurance, since the regulators do not allow simultaneous ownership of a bank and an insurance company, which are supposed to compete over certain services to the public. In the past, the regulator gave Dankner a tentative blessing to buy Bank Leumi, if he sold Clal Insurance.

Bank Hapoalim shares in the last year

Selling the shares to Nochi Dankner would mean that other members of the Dankner clan would be relinquishing their shares in Bank Hapoalim, which is their main source of status in economic circles. It would however greatly reduce the frictions within the Dankner business group - which does not include Nochi Dankner, who had left it behind and struck out on his own. Family problems have had their mark on the management at Salt Industries.

If the deals come through, the 20% controlling interest would consist of Arison with 11.50% of Bank Hapoalim, and Nochi Dankner with 8.5%. Arison would, to put it otherwise, own 57.5% of the controlling interest, while IDB Development would own 42.5%.

Capital market sources surmise that Dankner has sent feelers to the Supervisor of Banks regarding his terms for permitting the deal, and that understandings have been achieved with the Dankners regarding the sale.

For Dankner, it would be a circle finally closing. In 1997, he and his cousin Danny Dankner bought out the family interest in Bank Hapoalim via Salt Industries. Nochi Dankner was appointed vice chairman of the bank, but when he began detaching himself from the family business in 1999, he transferred the position to Danny and chaired the bank's credit committee instead.

Upon buying IDB, Nochi Dankner vowed to disconnect from Salt Industries in order to prevent a conflict of interest, because Salt Industries controlled Bank Hapoalim, which was a major lender to IDB. He therefore handed over his holding in Salt Industries to a trust until their sale.

Late Sunday night, Arison released a statement, reading: "Shari Arison, chairwoman of the Arison Group and the controlling shareholder of Bank Hapoalim, is examining the various aspects of the possibility of Nochi Dankner, the controlling shareholder of the IDB group, joining the group controlling Bank Hapoalim.

"Beyond other rights, Arison has the right of first refusal regarding the other shareholders of the bank. Whether if the transaction is done or not, Arison will continue to be the leading controlling shareholder of the bank."