Following pressure from shareholders in Dexia Israel (Public Finance) Ltd. (TASE:DXIL) to carry out the bank's merger with Israel Discount Bank (TASE: DSCT), the bank is starting to give the option serious thought. Sources inform "Globes" that representatives of Dexia Israel Bank are scheduled to meet with Discount Bank representatives next Thursday to discuss Discount Bank's bid for a merger with Dexia Israel Bank.
The sources said that the merger could take a number of forms. The first is a full merger, which will require an offer to purchase by Discount Bank. Another possibility is acquisition of a controlling interest in Dexia Israel Bank through share purchases on the stock exchange and obtaining a control permit from the Bank of Israel.
Discount Bank representatives are expected to meet with a special committee appointed by Dexia Israel Bank's board of directors, called a "strategy committee." The meeting is aimed at discussing the merger proposals made by both Discount Bank and Bank-Bank of Jerusalem (TASE: JBNK)( and assessing them in comparison with the option of remaining an independent bank. Several members of Dexia Israel Bank's board of directors and the bank's CEO, Olivier Gutman are on this committee.
The meeting with Discount Bank comes three weeks after Discount Bank CEO Lilach Asher-Topilsky submitted an official bid to acquire Dexia Israel Bank. Pressure to go ahead with the merger began last week from several shareholders in Dexia Israel Bank, which as of now has no controlling shareholder.
It was learned today that the Noked Capital hedge fund, under managing partner Roy Vermus, which holds 4.8% of Dexia Israel Bank's shares, sent a letter asking for the merger to go ahead. "As part of Dexia Israel Bank's responsibility to its shareholders, you are hereby asked to proceed with consideration of one of the offers that you have received. The process should take place in accordance with the criteria and timetables determined in advance," Noked wrote. Noked is also asking that the process take place "with transparency towards the shareholders and with regular public reports on the status of the process."
This letter comes on top of a similar letter sent last week by the Union of Local Authorities in Israel, which holds 6.5% of the shares in Dexia Israel Bank. This letter asks for a meeting of Dexia Israel Bank's shareholders in order to discuss the merger proposals. "It is very important to go ahead with the process of assessing the possibilities available to Dexia Israel Bank with no further delay, including the bids by Bank of Jerusalem and Discount Bank and how economically worthwhile these bids are," the Union of Local Authorities' letter states.
As of now, however, it appears that Dexia Israel Bank does not intend to convene a meeting of the bank's shareholders. In response to the letters from the shareholders, Dexia Israel Bank today announced, "The bank attributes great importance to the offers it received from the Bank of Jerusalem and Discount Bank and has established a strategy committee in this framework to help the board of directors deal with these offers. The bank will publish the relevant information to the public at the appropriate time in accordance with the legal requirements."
Dexia Israel Bank, whose market cap is NIS 500 million, provides credit to the local authorities. Four months ago, the bank was left without a controlling shareholder after its previous controlling shareholder, global concern Dexia, sold its shares in the bank on the stock exchange. Dexia Israel Bank has since become a takeover target, with at least two other banks making offers for its acquisition.
Published by Globes [online], Israel business news - www.globes-online.com - on July 31, 2018
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