Capital market sources believe that Israel Discount Bank (TASE: DSCT) will finance half of the acquisition of Clal Industries and Investments Ltd. (TASE: CII) by Len Blavatnik's Access Industries Inc., after he failed to strike deals with Bank Hapoalim (TASE: POLI) and Bank Leumi (TASE: LUMI).
Blavatnik seeks to finance Access Industries' NIS 1.27 billion purchase of 50% Clal Industries from Nochi Dankner's IDB Holding Corp. Ltd. (TASE:IDBH). Discount Bank is reportedly heading a syndicate that will provide NIS 600 million in credit, as part of a deal that the bank has already approved in principle. A deal will likely be closed within a week.
So far as is known, Access Industries will finance the rest of the acquisition from its own resources. The company said in response, "No comment."
Discount Bank said, "We cannot disclose information about our customers."
On May 20, IDB announced the sale of 49.9% of Clal Industries, most of IDB's 60.5% holding, to Blavatnik's Access Industries at a company value of NIS 2.55 billion. The sale price could rise to NIS 1.54 billion if Access Industries exercises an option to acquire the rest of IDB's stake in Clal Industries.
When IDB announced the deal, it said that the sale of Clal Industries was subject to certain conditions, including approval by the Antitrust Authority, if necessary, the consent of third parties, including parties that finance the company, and the securing of financing by Blavatnik. Although the financing has been approved, approval by the Antitrust Authority has not yet been received. Market sources believe that this approval will be forthcoming within weeks.
The parties intend to close the deal by June 30, and no later than September 30. The parties also agreed that if the deal is not closed by June 30, the payment will bear interest.
The sale of Clal Industries is a very important deal for IDB and its financial soundness, and is a main plank of it ability to meet its debt payments. This is because the agreement states that Access Industries will pay IDB 60% of the sale price (about NIS 760 million) when the deal is closed, and the balance after six months.
Published by Globes [online], Israel business news - www.globes-online.com - on June 28, 2012
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