Bank Leumi privatization complete

Consortium buys 9.99% at NIS 17.5 per share, with option for another 10.01%.

olmert Zelekha 298.88 (photo credit: Ariel Jerozolimski)
olmert Zelekha 298.88
(photo credit: Ariel Jerozolimski)
The privatization of Bank Leumi was completed after midnight Tuesday as the government sold 9.99 percent of Israel's second largest bank for NIS 2.474 billion to a consortium made up of Gabriel Capital and Cerberus Capital Management, the Finance Ministry said. A senior executive of Cerberus Capital Management is former US vice president Dan Quayle. The consortium, which is known as Barnea Investments, will pay NIS 17.5 per share for the stake and have an option to buy an additional 10.01% of Leumi. If the consortium decides to exercise its option, the deal would end up costing NIS 4.617 billion. Finance Minister Ehud Olmert said that the sale represents an additional achievement for the Israeli economy in general, and for the privatization process specifically. He noted that such a large, record transaction would increase the competition between banks and would contribute to the Israeli economy. Accountant General Yaron Zelekha attributed the high sale price to the unique structure of the tender. This is the first time in Israel that financial players and strategic investors competed in the same tender. The sale is the last stage of the privatization of Bank Leumi, whose shares the government started selling on the Tel Aviv Stock Exchange in 1993. The privatization is also the last to take place in the sector after 22 years of government involvement following the banking crisis of 1983, when the state was forced to step in to save the banks from collapse.