Since the acquisition of Israel Discount Bank (TASE: DSCT) in 2006, its controlling shareholders have made a profit of NIS 349 million, of which the Bronfman family's share is NIS 210 million, according to an analysis by "Globes". The profit amounts to a 27% return on investment, or just 4.4% a year over five years.
In January, the Bronfman's paper profit on the investment was NIS 493 million, but the subsequent 22% drop in Discount Bank's share price shaved the figure. Were the Bronfman's to sell their stake in the bank in order to acquire Shufersal Ltd. (TASE:SAE), the bank's current share price would give the family a capital gain of NIS 210 million, based on the current value of Bronfmans and Schron's stakes of NIS 1.65 billion. Their partner in the controlling core, Rubin Schron's paper profit on the investment is NIS 139 million.
The Bronfman Schron group acquired 26% of Discount Bank in February 2005 for NIS 1.3 billion at NIS 5.10 per share. The transfer of control took place exactly one year later: the Bronfmans acquired 15.6% of the bank and 60% of its controlling core, while Rubin Schron acquired 10.4% of the bank and 40% of its controlling core.
Since then, Discount Bank has distributed only one dividend - NIS 250 million in 2008, of which the Bronfmans and Schron received NIS 52 million. In early 2011, the bank held a rights issue, which diluted the Bronfman-Schron stake to 25.2%. The Bronfmans now own 15.1% of the bank and Schron owns 10.1%.
Discount Bank's share price fell 3.9% today to NIS 6.03, giving a market cap of NIS 6.6 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on October 24, 2011
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