Bank Hapoalim (TASE: POLI) yesterday announced that in accordance with a shareholders' agreement between it and IDB Development, controlled by Eduardo Elsztain, the parties had agreed that IDB would have almost four weeks to find a buyer for Bank Hapoalim's 9.46% stake in Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS). If no buyer is produced November 11, Bank Hapoalim can sell its stake to any buyer it wishes, without IDB having first refusal rights. IDB can now search for a buyer for Bank Hapoalim's shares in Clal Insurance in pursuance of its own efforts in recent years to find buyers for its own stake in the insurance company at NIS 62 a share, 4.6% under yesterday's closing price on the TASE.
Bank Hapoalim reported to the TASE that it would post a NIS 119 million pre-tax capital gain on the sale of its holdings in Clal Insurance. The profit will be included in Bank Hapoalim's fourth quarter financial statements.
It was reported yesterday that the parties had agreed that "IDB will be given a period of time for finding a number of buyers with whom the bank will contract, subject to legal provisions, in transactions for the sale of the bank's entire holding in Clal Insurance shares at NIS 62 per share in off-floor transactions in which payment need not be made on a single date, but which must be made no later than November 10, 2018 ('the purchase date'). If the sale of all the shares is not completed by November 10, 2018, the bank will be entitled to sell them. The shareholders' agreement, including the provisions of IDB's first refusal rights included in it, will be null and void as of the purchase date or November 10, 2018, whichever is earlier," as reported by Bank Hapoalim to the TASE. In effect, Bank Hapoalim has irrevocably sold its holdings in Clal Insurance.
IDB Development currently owns 29.8% of Clal Insurance's shares, which no longer constitutes a minimum controlling core in the latter according to binding regulations in Israel. Part of IDB Development's holdings in the company were sold by Moshe Tery, the trustee appointed by the Supervisor of Insurance for the controlling interest, over a period of years. Tery sold shares in Clal Insurance belonging to IDB Development in packets of 5%, and will continue doing so every four months. Before Tery's appointment, IDB Development owned 55% of Clal Insurance's shares. Actually, according to the administrative order, IDB has exercised its first refusal rights under the shareholders' agreement and is not entitled to hold the shares by itself, so it sold them via swap to a financial investor.
The holdings in Clal Insurance, managed by CEO Yoram Naveh and chairperson Dan Naveh, of Bank Hapoalim, managed by CEO Arik Pinto, are of long standing. Bank Hapoalim previously owned over 10% of Clal Insurance's shares. Following the Bachar reform in the middle of the preceding decade, however, it was forced to reduce its holding to less than 10%. In this context, Bank Hapoalim stated yesterday, "If the bank sells all of its holdings in Clal Insurance, it will post a NIS 119 million pre-tax profit that will be included in its financial statements for the fourth quarter of 2018," and added, "There is no certainty about this date for the sale of the holdings in Clal Insurance."
Any holding of 5% or more in the shares of Clal Insurance or any other investment institution requires authorization from the Capital Market, Insurance, and Savings Authority.
Bank Hapoalim was once the dominant shareholder in Clal Insurance. There is currently no dominant shareholder in the insurance company, following the gradual sales of shares from the controlling interest by the trustee appointed by the Supervisor of insurance.
Bank Hapoalim is likely to soon face a large fine imposed by the US tax authorities, following an investigation for which it has provided $365 million to date.
Published by Globes, Israel business news - en.globes.co.il - on October 17, 2018
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