It is believed that the Bank of Israel will demand the creation of a mechanism to restrict Shari Arison’s power at Bank Hapoalim (LSE: BKHD; TASE: POLI) as a condition for approving the changes in the bank’s ownership structure. An example would be to increase the consent of the controlling interest for major decision from 75% to 90%. The Bank of Israel places great importance on no one controlling shareholder at the bank.
The Bank of Israel Banking Supervision Department will have to approve Shari Arison’s acquisition and reclassification of the Bank Hapoalim shares, which could set a precedent for a single absolute controlling shareholder of a bank. Following the purchase of her US partners’ shares in the bank’s controlling core, Arison’s share of the controlling core will increase from 57.5% to 85%; decisions on many matters require the consent of 75% of the controlling interest. Arison reportedly has no intention of acquiring Israel Salt Industries Ltd.’s (TASE:SALT), controlled by the Dankner family, stake in the bank.
Arison will now be able to pass any decision she wants at Bank Hapoalim, and Salt Industries will lose all influence. Bank Hapoalim vice chairman Dan Dankner is the family’s top representative at the bank.
On Friday, Rosh Hashana eve, Arison bought 3.2% of Bank Hapoalim owned by its US shareholders, Michael Steinhardt, Leonard Abramson, and the Schusterman family, for $168 million, reflecting a 12% discount on the bank’s closing share price on Thursday. The shares are part of the bank’s controlling core.
After the purchase, the US shareholders will own 2.35% of the bank. Arison and the US shareholders have agreed that these shares will be reclassified as free shares, and not part of the controlling core in the bank, and that Arison’s shares will replace them in the controlling core.
Bank Hapoalim’s controlling core comprises 20% of the bank’s shares. Before Arison bought out her US partners, she owned 16.44% of the bank, and 11.5% of its controlling core. The other partners in the controlling core are Salt Industries, which owns 6% of the bank, including 3% in the controlling core, and the US investors, who own 5.54% altogether. Salt Industries owns 15% of the bank’s controlling core and the US shareholders owned 28.5% until the sale to Arison.
Published by Globes [online], Israel business news - www.globes.co.il - on September 25, 2006
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