Arison sells control of Shikun & Binui to US real estate investor Naty Saidoff

Low price for deal seen as relating to concern over firm’s Africa bribery allegations; sale could ease pressure on share price of Bank Hapoalim

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Shari Arison (photo credit: Yossi Zeliger/Flash90)
Shari Arison (photo credit: Yossi Zeliger/Flash90)

The investment arm of US-Israeli billionaire Shari Arison has agreed to sell a controlling stake in Israel’s largest construction firm, Shikun & Binui Ltd., to US-Israeli real estate investor Naty Saidoff for NIS 1.1 billion ($307 million).

Shikun & Binui announced the accord in a filing to the Tel Aviv Stock Exchange late Wednesday. The company, whose shares are traded on the exchange, is valued at NIS 2.73 billion, and Arison Investments controlled 47.5 percent of the firm.

Arison, who has held shares in Shikun & Binui for the past 22 years, said the sale was part of its strategy to diversify its investments globally, Reuters reported. However, shares of the construction firm have declined almost 23 percent in the past 12 months, as the company grapples with an investigation into suspicions of bribery, involving tens of millions of dollars, in Africa by employees.

Arison Investments also holds a stake in Bank Hapoalim Ltd., one of the nation’s two largest banks.

Shikun & Binui has operations in real estate, infrastructure and renewable energy in Israel and abroad. As of end December 2017 it employed 9,673 workers, according to its website.

“The stake was bought at a 14 percent discount to last night’s closing value,” Saar Golan, an equity trader at Meitav Dash Brokerage in Tel Aviv, said in a morning note to investors. The low price for the controlling stake “reflects concerns” over the probe into allegations the company engaged in bribery to win contracts in Africa.

In addition, under a new law in Israel, which seeks to reduce the concentration of holdings, Arison Investments needed to sell either its stake in Bank Hapoalim or its stake in Shikun & Binui, Golan wrote.

“The fact that she divested Shikun & Binui could release some pressure from Hapoalim’s share price,” he wrote.

Earlier this year, Arison tried unsuccessfully to sell her stake in Hapoalim. The bank’s shares have underperformed those of its biggest rival Bank Leumi Le-Israel Ltd. by more than 30% in the last year, Golan said, partly over uncertainty surrounding a US tax probe.

Bank Hapoalim, which has a market capitalization of almost NIS 33 billion, has seen its shares rise 5.5 percent in the past 12 months compared to a 33 percent surge in Leumi’s shares.

US authorities targeted three Israeli banks with investigations regarding tax evasion by customers. In 2014, Bank Leumi Le-Israel Ltd. agreed to pay some $400 million to US regulators to settle a criminal probe after admitting it helped US taxpayers hide assets. Investigations by US regulators into Bank Hapoalim Ltd. and Bank Mizrahi-Tefahot Ltd. are ongoing. Bank Hapoalim said in May that it set aside an additional provision of NIS 60 million ($17 million) to cover a possible future settlement with US authorities, bringing the total amount set aside for a possible settlement to $365 million, Reuters reported.

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