Nochi Dankner has done it. A month after he astounded the business world with the report of his negotiations to take over IDB, the agreement has been signed. The Ganden consortium, headed by Dankner, will pay $540 million for 52% of IDB. A $50 million down payment was handed over to the sellers last Thursday. The deal reflects a value of $1.05 billion for IDB, 36% higher than its market capitalization.
Ganden Holdings, controlled by Nochi Dankner, will hold 60% of the controlling interest and will be responsible to the sellers for meeting the terms of the agreement. Ganden’s partners, Yitzhak Manor and Avraham (Bondi) Livnat, will hold 20% each of the controlling interest. Last week, Dankner refused to comment on the financing of the deal. It is believed the matter is not yet settled. As far as is known, bank credit will account for 60% of the payment. A syndicate led by Bank Leumi is expected to provide the loans.
The closing of the deal is subject to receipt of approval from the Supervisor of Banks, the Supervisor of Insurance, and the director general of the Anti-Trust Authority. It is estimated that it will take another six months until the deal finally closes.
Gamble on recovery
After it does, Nochi Dankner will become, at age 47, owner of one of Israel’s largest holding companies. He will have stakes in quite a few top-notch companies, such as supermarket chain Super Sol, Clal Insurance, construction company Azorim, cement monopoly Nesher, and leading mobile telephony company Cellcom. However, he will also take on several problematic holdings in the communications sector, headed by troubled cable television company Tevel, and some risky overseas ventures. Dankner is gambling on the economy emerging from recession and on a recovery on the capital market and in the communications and technology sectors. If these things do not come to pass, it’s hard to see how the huge loan required to finance the acquisition will be paid off.
Taking over from Leon
IDB waited for over a year to be taken over, ever since it was reported that a consortium headed by Leon Recanati and Kardan would buy control. In February this year, that deal was cancelled, on the grounds that the prior conditions had not been met. The transaction was based on a $1.3 billion value for IDB. It is believed that the intended buyers withdrew after they decided that the deal had become too expensive for them in the light of the sharp fall in IDB’s share price.
Following the cancellation of this deal, IDB chairman and CEO Leon Recanati was forced to give up on remaining part of the controlling interest in the company. The move to sell to Ganden was led by his nephew Oudi, who resides in Switzerland. If the deal with Ganden does not go through, Leon wishes to make a comeback and be part of any future controlling interest in IDB.
In order to obtain the Supervisor of Banks’ approval for the deal, Nochi Dankner’s family will probably have to sell its holding in Salt Industries, which owns 12% of Bank Hapoalim, as IDB is one of the bank’s main borrowers. In addition, IDB has a 12% stake in Israel Discount Bank.
The IDB group operates mainly through investment companies Discount Investment Corporation and Clal Industries It is thought that Ganden will make considerable cutbacks in IDB’s expensive and unwieldy management structure, and thus save millions of shekels a year. Almost certainly, the question will arise whether the veteran joint CEOs of IDB Development, Dalia Lev and Eli Cohen, will continue in their posts.
Leaving the fold
Nochi Dankner is buying control of IDB only five years after striding out in business independently. Until the Dankner family bought into Bank Hapoalim, Nochi Dankner was involved in managing the family’s ramified business interests. He headed the law firm of Dankner-Lusky, and at the same time, together with his partner Adv. Avi Fischer, he set up Ganden Tourism and Aviation, which controls such companies as Israir Airlines and Toursim, travel agency Natour, Open Sky, and Tzabar - The Third Millenium Tourism and Vacation Holdings.
The acquisition of Bank Hapoalim in 1997 heralded Dankner’s transformation into a leading player in the family’s business affairs. In the years that followed, as deputy chairman of the bank, and later as chairman of the supreme credit committee, Nochi Dankner became an important figure in Israeli business.
The Bank Hapoalim deal was also the background to the confrontation with his uncle, Shmuel Dankner, who had been the dominant figure in the family until that time. The differences of opinion between the two almost turned into a battle for control of the Dankner group. They ended with the sale of Nochi Dankner and his family’s shares in Dankner Investments, which is the umbrella for the family’s real estate and communications interests.
Lively in real estate
The high price they received enabled Nochi and his family to set up Ganden Investments in December 1999. The company has become one of Israel’s liveliest real estate companies. It is currently involved in projects to build some 2,200 housing units and some 100,000 meters of commercial, office, and industrial space.
In pursuit of the company’s policy of investing in existing real estate concerns, Ganden Group bought substantial stakes in stock exchange companies Kardan Real Estate, Villar, and Al-Rov, and recently bought the controlling stake in Azorim Properties, one of Israel’s largest income-producing real estate companies. By the time the IDB deal is completed, Ganden Investments is expected to merge with Ganden Tourism and Aviation, in order to expand the company’s capital base.
Prominent partners
Nochi Dankner is not the only well-known name among Ganden’s shareholders. His partners in the company include Adv Avi Fischer, Davidi Gilo, Tzur Daboosh, CEO Rafi Bisker, and overseas investors Darko Horvat of Slovenia, the Gilinski family of the US, and the Schimmel family of the UK. Ganden announced last week that, in anticipation of the IDB deal, it had raised $100 million from its shareholders, apparently mainly from the overseas shareholders.
Ganden’s partners in the deal are Yitzhak Manor and Avraham Livnat. Manor, son-in-law of the late David Lubinski, has in recent years headed the Lubinski group, importers of Peugot and Citroen cars. The family is also part of the controlling interest in Union Bank of Israel, alongside Shlomo Eliahu and Yeshayahu Landau. The value of the Lubinski group’s businesses is estimated in the hundreds of millions of dollars, and it is highly liquid thanks to its prosperous vehicle business.
Avraham Livnat owns 50% of haulage company Taavura. The other 50% is held by Clal Industries, part of the IDB group. It is believed on the capital market that Livnat will sell his shares in Taavura to IDB in order to avoid conflicts of interest arising from his cross-holding.
Published by Globes [online] - www.globes.co.il - on 29 May 2002