Discount Sold for 74-81% of Its Value, State Says

Israel Discount Bank released its estimated value yesterday, which it had prepared before its privatization sale by M.I. Holdings, on behalf of the state, to the Matthew Bronfman group. Goren Capital Group, a Tel-Aviv based investment bank which prepared the valuation estimates that Discount Bank was sold for 74-81 percent of shareholders' equity. Goren Capital valued the bank at NIS 4.5-4.9 billion. Bronfman paid NIS 1.3 billion to the state for a 26 percent stake. One of the trickier parts was valuing employee options, which Goren priced at 50-75 percent of face value based on the Black and Scholes option pricing model. Goren reported that because Discount's options include limits on their exercising and negotiating, it priced the options closer to 50 percent.