February 21, 2018 / 9:53 AM / 6 months ago

UPDATE 1-Arison talks to bring in partners for Bank Hapoalim fail

(Adds comments from Arison, source)

TEL AVIV, Feb 21 (Reuters) - Arison Holdings said on Wednesday that talks to bring in three North American financial institutions to share its controlling interest in Bank Hapoalim ended without reaching a binding agreement.

In September, billionaire Shari Arison signed a preliminary agreement to sell 49 percent of Arison Holdings, through which she holds a controlling 20 percent stake in Hapoalim, Israel’s largest bank.

“Due to a lack of agreement on commercial issues, the non-binding memorandum of understanding signed between the sides in September 2017 did not progress to a binding accord,” Arison Holdings said in a statement, without providing details.

Hapoalim, which is the subject of an investigation by U.S. authorities over possible tax evasion by the bank’s U.S. clients, has a market value of 32.5 billion shekels ($9.3 billion).

Its shares were down 1.4 percent to 24.06 shekels in morning trade, compared with a 1 percent drop in the Telbank index of Israel’s five largest banks.

A source close to Arison Holdings said the investigation was not the reason the sides failed to close a deal, noting that this was known to the institutions in September when they signed the non-binding agreement.

Hapoalim set aside an additional $80 million in the third quarter to cover a possible future settlement in the tax investigation, bringing the total provisioned for the case to $268.5 million.

The source, who asked not to be named, said Arison Holdings would be open to talks with other potential investors, although he said there was nothing in the pipeline.

The Arison family has controlled Hapoalim for two decades. Arison’s father, Ted, who made his fortune as founder of Carnival Cruise Line, was part of a consortium that bought control of the bank from the government. Arison, Israel’s wealthiest woman, has since bought out her partners. ($1 = 3.4949 shekels) (Reporting by Tova Cohen; Editing by Steven Scheer and Elaine Hardcastle)

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