"The Bronfman family are in talks to sell their holdings in Discount Bank," a senior business figure revealed today, confirming the rumors of recent months of an impending sale of the shares or a search for a third investor to share the controlling interest.
The rumors met with sweeping denials from family members, who claimed that they amounted to a libel, and declared that they had no interest in selling the controlling core of the company, and that they saw the investment in Israel Discount Bank (TASE: DSCT) as strategic in nature. However, a source informed "Globes" today that the rumors were not baseless, as the Bronfman family had tried to portray them; in fact, far from it.
"They can claim they aren't talking to potential buyers from now until tomorrow, but in fact, the situation is the opposite. They were approached with a serious offer, and they are talking, and they're interested. It's not a matter of someone putting out feelers and being ignored by the Bronfman family. Not at all. This is highly serious," the source said.
According to him, the talks are serious, but there is still no clear outline of a deal, and there is no certainty that it will happen. "Nothing is closed yet. The way to a deal is long, and many questions need to be answered, such as the price, and the deal structure, but the Bronfman family is very involved. At this stage, it is not clear whether the deal will go ahead, as with any other serious deal that could fail at any stage of negotiations."
Market sources estimate that the Bronfman family's desire to sell the shares stems from the demand by Supervisor of Banks Rony Hizkiyahu that Discount Bank should raise more capital in order to meet capital adequacy requirements in full and strengthen its shareholders' equity.
This demand gives the Bronfman family three choices: to inject the required capital into the bank; to sell their holdings; or to curtail growth in the bank's lending activity. In any event, it should be remembered that the 26% of the bank's shares held by the Bronfman-Schron consortium may not be sold until February 2011.
The source added that this was also the background to the demand that Shlomo Zohar should resign as chairman of the bank. "This whole story will end with the sale of their holdings in the bank to someone else. What is certain today is that the bank is for sale."
A spokesperson for the controlling shareholders in the Bronfman-Schron consortium said in response to the report, "The subject is not on the consortium's agenda. The consortium sees the bank as a strategic investment."
Published by Globes [online], Israel business news - www.globes-online.com - on November 4, 2009
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