Bank Leumi (TASE:LUMI) is negotiating to sell its 18.23% stake in Direct Insurance - Financial Investments Ltd. (TASE:DIFI) to Zur Shamir Holdings Ltd. (TASE:ZUR), , which owns the 47.63% controlling interest in Direct-IDI. Bank Leumi confirmed the report today. The Schneidman family is the controlling shareholder in Zur Shamir.
Direct Insurance - Financial Investments VP and CFO Igal Mor said only general talks were involved, and “nothing reaches the level of negotiations”.
The expected company value for the deal is NIS 130 million, approximately the same as the NIS 129 million market value of Bank Leumi’s stake in Direct Insurance - Financial Investments. Direct Insurance Financial Investments’ share price has risen 29.4% since the beginning of the year.
Bank Leumi is a party at interest in three insurance companies: Migdal Insurance and Financial Holdings Ltd. (TASE:MGDL), Israel’s largest insurance company 19.9%; Direct Insurance - Financial Investments 18.53%; and in Direct Insurance Financial Investments subsidiary Direct-IDI Insurance Company Ltd. (TASE:IDI - 5.25%.
Under the Bachar committee laws, if Bank Leumi wants to sell life insurance, pension, and provident fund products at its branches, it may not do so if it owns more than 10% of a company that controls an insurance company, or it owns more than 5% of an insurance company. Bank Leumi must therefore sell is excess stake in Migdal and Direct Insurance Financial Investments, and cease being a party at interest in Direct-IDI.
On Thursday, Bank Leumi sold its stake in Leumi Pia Trust Management Co. to Harel Insurance Investments Ltd. (TASE:HARL) for NIS 535 million. The bank must also sell its stake in Psagot Ofek Investment House Ltd., which manages provident funds with NIS 33 billion in assets; and its 66% stake in Kahal Employees’ Supplementary Training Fund Ltd.
Published by Globes [online], Israel business news - www.globes.co.il - on September 18, 2005