Today, Mizrahi Tefahot Bank (TASE:MZTF) (formerly United Mizrahi Bank) made an offer to Bank Hapoalim (LSE: BKHD ; TASE: POLI) to buy Bank Otsar Hahayal for 153% of its shareholders' equity, or NIS 984 million. The proceeds for Bank Hapoalim, which owns 66% of Bank Otsar Hahayal, would be NIS 650 million. The offer is the highest ever for an Israeli bank. Bank Leumi (TASE: LUMI) was sold to the consortium of Cerberus Capital Management LP and Gabriel Capital Management for 143% of its shareholders' equity.
Mizrahi CEO Eli Yones has made the offer conditional upon the shares being transferred clear of third party claims, meaning that the dispute between Bank Hapoalim and Hever (the IDF and security forces servicemen and pensioners NGO), which owns 24% of Bank Otsar Hahayal, must be resolved. Bank Hapoalim declined to respond to the report.
Mizrahi chairman Jacob Perry told "Globes" that the offer was a serious one. "We're not playing games. We want to buy Bank Otsar Hahayal, and we have submitted a formal offer." Perry explained the unusual way in which the offer was published, through a report to the Tel Aviv Stock Exchange, saying, "We are not conducting negotiations in public; we sent an offer, and it has to be reported."
Commenting on the residual tension between Yones, who was formerly CEO of Bank Hapoalim, and Bank Hapoalim's management, Perry said, "Personal resentments are irrelevant in business. Bank Hapoalim needs to weigh the offer on its merits."
Banking sources believe that Governor of the Bank of Israel Stanley Fischer will not hesitate to exercise his authority to appoint a receiver to sell Bank Hapoalim's holdings in Bank Otsar Hahayal on its behalf, if Bank Hapoalim fails to sell the holdings by the deadline of February 4.
Published by Globes [online], Israel business news - www.globes.co.il - on January 4, 2006