Bank Leumi (TASE: LUMI) today notified the TASE that, despite repeated attempts, it had not reached an agreement to extend the deadline for completion of the Tnuva Food Industries Ltd. deal, and there is no contact between the parties on this matter. The bank's statement effectively cancels the acquisition of Mivtach Shamir Holdings Ltd's (TASE:MISH) stake in Tnuva. Bank Leumi first announced the cancellation of the deal in June.
In a statement, Bank Leumi said, "Even though there are no talks on a deal, Leumi believes that this is a good company to invest in by the banks, and if and when the circumstances are suitable, the bank is prepared to reconsider investing in the company at suitable terms."
Earlier this month, "Globes" reported that, due to the cottage cheese crisis and concerns about tighter regulations to lower prices for dairy products, which could erode Tnuva's profits, Bank Leumi asked Tnuva controlling shareholder Apax Partners for data to reassess the company's value.
A source close to Bank Leumi said, "Something happened in the past couple of weeks. It's impossible to ignore what happened. Tnuva is no longer the same company, and the price will have to change, and the direction can only be down."
Tnuva's value, including debt, for the Bank Leumi-Mivtach Shamir deal was NIS 6 billion. Mivtach Shamir was due to sell its indirect 20.7% stake in Tnuva to Bank Leumi's investment arm Leumi Partners Ltd. for NIS 775 million. The bank would pay NIS 387.5 million for half of Mivtach Shamir's stake in the special purpose vehicle (13.5%) through which it and Apax own Tnuva, which would give the bank a 10.35% holding in the company. Private investors were to buy the other half of of Mivtach Shamir's stake in the special purpose vehicle.
Published by Globes [online], Israel business news - www.globes-online.com - on July 28, 2011
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