Micky Arison's final and official offloading of his Israeli holdings can be welcomed. The son of Ted Arison and brother of Shari Arison never wanted to be here, own or manage assets here, or have any influence on them.
He never did any of these things, even though he owned a third of the controlling core of two key companies: Bank Hapoalim (TASE: POLI) and Shikun u'Binui Holdings Ltd. (TASE: SKBN). He has probably not visited Israel in a decade, including for family events, even though his mother, Mina, lives here and Shari has an active life here.
Micky and Shari's partnership in Arison Holdings Ltd. was forced on them by their father a few months before his death. He ordered Micky to be Shari's partner in Israel, even though she would have effective control of the company, through which the family owns its Israeli businesses. At the same time, Shari was Micky's partner in the family's biggest business, cruise operator Carnival Corporation (NYSE: CCL; LSE: CCL).
The Arisons own 30% of Carnival, and Micky has the unchallenged control of it, serving as its chairman and CEO. This has been the case since Ted Arison's death in late 1999, when the business and personal relations between the other partners were chilly to frigid.
For years, Micky Arison has wanted to get rid of his Israeli holdings. Even when Bank Hapoalim was thriving and distributed dividends, he didn’t want it. He hardened his position further after Shari Arison bought out the American partners - all friends of Ted - in the bank's controlling core. More than once, Micky told his friends of his criticisms about the conduct in Israel. If at first he was not willing to sell at any price, by the end, he just wanted out, regardless of the price.
At first, Shari Arison did not want to buy her brother's stake in Arison Holdings - after all, why give him good money, either in cash or in her shares in Carnival - when she already had de facto and de jure control of the company? But the pressure by Micky increased, to the point of a threat to sell his stake in Arison Holdings to third parties, and Shari would have to live with the consequences for better or worse. For years, he held talks, some well publicized, some not, with Israeli and US parties to buy the stake in whole or in part. We can assume that the purpose was more to threaten Shari by forcing her to take in a hostile partner.
Three years ago, Shari Arison asked the Bank of Israel to permit a change in the controlling core in Bank Hapoalim and let her acquire her brother's stake in Arison Holdings. The Bank of Israel initially refused to allow the bank to have a single controlling shareholder, but later, when it was clear that Micky was on his way out come what may, and after the storm over former Bank Hapoalim chairman Dan Dankner and Shari's stubbornness to defend him, passed, Supervisor of Banks David Zaken gave his consent to the deal, on the condition that the position of Bank Hapoalim's external directors is greatly strengthened, pursuant to the Banking Law.
Over two years ago, then-Supervisor of Banks Roni Hizkiyahu and Zaken outlined the exact terms to Shari. She was supposed to return with her consent, but she chose instead to keep things unchanged and ignore the pressure from her brother. This was made easier by Micky's focus on Carnival's plunging financial circumstances during the 2008-09 global economic crisis.
Two months ago, Shari Arison informed Zaken that she accepted the Bank of Israel's terms. During the interim, Bank Hapoalim's market cap fell, which is apparently the basis for the Arison Holdings deal, but so did the market cap of Carnival to $28 billion, down 26% in 2011 alone.
Something else also happened: a few months ago Zaken amended Proper Conduct of Banking Business Directive 301. The amendment expands the authority and responsibilities of banks' external directors who function pursuant to the Bank of Israel Law. These directors also serve on the banks' audit committees.
Bank Hapoalim's notice to the TASE today about the Arison Holdings deal means that its five external directors, the third of the board who serve under Directive 301, have become the guardians of the bank's proper business conduct and its controlling shareholder. These directors are Mali Baron, Amnon Dick, Yacov Peer, Yair Tauman, and Yosef Yarom.
Published by Globes [online], Israel business news - www.globes-online.com - on December 13, 2011
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