The deliberations are reaching a peak. As of today, three consortia that could be called “strategic” plan to bid for 9.99% of Bank Leumi (TASE:LUMI) tomorrow; Nochi Dankner, Shlomo Eliahu, and US hedge funds Cerberus Capital Management LP and Gabriel Capital Management.
Even if all these three groups submit bids, they all have problems that could disqualify their bids, or prevent them from exercising an option for an additional 10.01% of Bank Leumi and acquiring control of the bank. The fact that these entities are not investment banks that plan to sell the block of Bank Leumi shares within days of the purchase, means that they can be called “strategic investors”.
Nochi Dankner, together with a group and in partnership with Adv. Avi Fischer, control Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), and obviously cannot own both a bank and large insurance company. Capital market source say that Danker’s personal deliberations will peak tonight. He will probably bid for the entire block by himself.
Merrill Lynch & Co. (NYSE:MER), Deutsche Bank (NYSE: DB; LSE: DBK; XETRA, AEX, SWX, ATX: DBKG), UBS (NYSE; SWX: UBS), and others organizing consortia to bid in the Bank Leumi tender asked Nochi Dankner to join the financial consortium to which they will sell the shares immediately after buying them.
Between them, Cerberus Capital Management and Gabriel Capital Management manage over $25 billion. They specialize in investing in financial institutions around the world. The consortium has not yet met the Bank of Israel condition for bringing private investors into the controlling core. The Bank of Israel mandates that a financial investor may own up to 50% of the controlling core, on the condition that it does not control it.
The Cerberus-Gabriel consortium also wants Bank Leumi USA to move its place of registration from New York to Utah. The consortium is represented by Cerberus manager Jonathan Heller, and Lehman Brothers vice chairman Harvey Krueger and executive Len Rosen. The consortium’s Israeli partners are Adv. Ehud Sol and Avi Berger CPA.
Shlomo Eliahu controls Eliahu Insurance, and owns shares in Israel Phoenix Assurance Ltd. (TASE:PHOE1;PHOE5) and Union Bank of Israel (TASE: UNON). He has no plans to sell Eliahu Insurance. He has a temporary permit from the Bank of Israel Banking Supervision Department to own his present 9.98% stake in Bank Leumi, but he may not buy more shares in the bank.
Published by Globes [online], Israel business news - www.globes.co.il - on November 13, 2005