Bank of Jerusalem not seeking hostile takeover of Dexia

Dexia Photo: Shutterstock

The bank told Dexia Israel that it wants a consensual merger.

Bank of Jerusalem's (TASE: JBNK) efforts to push through its merger deal with Dexia Israel (Public Finance) Ltd. (TASE:DXIL) are continuing. Bank of Jerusalem, controlled by the Shoval family, sent an answer today to Dexia Israel making clear that it was seeking a consensual merger, not a hostile takeover. The letter came after Dexia Israel refused to meet with Bank of Jerusalem, demanding to first see the full merger offer, including the prices.

"We want to make it clear that the legal structure of the deal we are seeking to consider with you is a deal in which we will acquire 100% of the shares in Dexia Bank. Our negotiating partner for such a deal is Dexia Bank's board of directors," the letter states.

A source close to Bank of Jerusalem told "Globes," "In view of the questions addressed to us, we have decided to publish a letter making it clear that we are seeking a merger in cooperation with the board of directors of Dexia Israel, not a hostile measure, and that the merger will be sent to the bank's shareholders only afterwards.

Bank of Jerusalem is not yet a detailed offer including the price, as requested by Dexia. Bank of Israel writes that it believes that the two parties should form special teams to meet and discuss the matter. "Following an initial exchange of opinions, we will be able to submit to you an indicative offer that refers to the form of the deal, including the question of all elements of the proceeds (shares and cash) or other mechanisms, insofar as they are needed."

Dexia Israel, which deals mainly with credit to the municipal sector, became a bank without a controlling core several weeks ago, when global bank Dexia sold all of its holdings in the bank in a single day to a series of investors. The bank has since undergone quite a few changes, including the resignation of the chairperson appointed by global bank Dexia and he appointment of Levanan Shifman by the board of directors. At the same time, the Bank of Israel committee for the appointment of directors announced that registration for candidates wishing to be appointed a director in the banks would be opened. The composition of the board of directors that will consider the merger is therefore also likely to change in the coming months.

As of now, it appears that the Dexia Israel board of directors is showing no enthusiasm for the merger with Bank of Jerusalem. On the other hand, at least one major shareholder has shown support for such a deal - the Federation of Local Authorities in Israel, which holds 6% of the Dexia Israel's shares and is one of its key customers, sent a letter supporting talks on the merger. It cannot be ruled out that if the Dexia board of directors continues its refusal to meet with representatives from Bank of Jerusalem, other shareholders will join the Federation of Local Authorities in exerting pressure on the board of directors.

Since Dexia Israel is a bank with no controlling interest, every party owning more than 2.5% of its shares must report its holding. The list of reports transferred by the bank so far indicates that in addition to investment institutions such as Harel, Psagot, and Yelin Lapidot, there are also funds among the parties at interest: Noked Capital and Sphera Fund. Private shareholders Teddy Sagi and Danny Rimoni are also parties at interest.

Since Dexia Israel became a bank without a controlling core less than two months ago, its share has lost 10% of its value, due to the sale of global bank Dexia's shares at a price 13$ below the market price. The share price not yet completely recovered from that discounted deal.

Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Dexia Photo: Shutterstock
Dexia Photo: Shutterstock
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