Leumi USA mergers with American Valley National Bank at a value of $ 1.2 billion

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by Ifi Reporter Category:Financial Sep 23, 2021

Bank Leumi reported that it has signed a deal with the American Valley National Bank under which Leumi USA and the American bank will merge at a value of $ 1.2 billion. Thus, after the merger, Leumi USA will hold 14.2% of the merged bank and will be the largest shareholder in the bank - but not a controlling shareholder. Bank Leumi is expected to post a profit of up to NIS 750 million from the transaction. The merger The transaction is subject to regulatory approvals and the approval of the General Meeting of Bank Valley.
The merged bank will be the 29th largest bank among the banks traded on the US stock exchange. About 90% of the consideration for the transaction will be paid in shares of the merged bank, and the balance in cash. Mendelssohn, is expected to serve as Deputy Chairman of the Board of Directors of the Merged Bank and members of management and senior executives will serve in a variety of key positions at the Merged Bank.
According to Vali Bank's financial statements as of June 30, 2021, the Bank's assets amount to $ 41 billion (of which $ 32 billion is a credit portfolio). Vali's profit after tax in the first half of 2021 amounted to $ 230 million. Valley's after-tax profit for 2020 and 2019 amounted to approximately $ 378 million and approximately $ 297 million, respectively.
Malumi said that "the decision to enter into a deal with Valley was made after an examination process conducted by the bank regarding its strategy to expand operations in the US while carefully managing risks and examining a number of moves and alternatives."
Following the deal, Leumi CEO Hanan Friedman stated that "this is a strategic move, designed to intelligently expand business operations in the United States. The merger will give Leumi a significant and unprecedented presence in the Bank of Israel in the American market. Tech, who will now enjoy the capabilities of a large American bank with a commitment to Israeli customers. "
As a result of the transaction, Leumi is expected to post a capital gain of NIS 650-750 million after tax, depending on the price of the Vali National share on the day the transaction is completed. In accordance with the terms reached between the parties, Leumi will be able to appoint two directors to the board of directors, as well as an observer to the board. The shares that Leumi will receive will be blocked for a period of four years, which will be released in four equal shares each year.
Eli National manages approximately $ 41 billion in assets, of which approximately $ 32 billion is on credit. The bank's profit after tax was $ 230 million at the end of the first half of the year; The bank ended 2020 with a profit of $ 378 million. Leumi USA, managed by Avner Mendelssohn, ended the first half of 2021 with a net profit of $ 42.1 million. The bank's equity at the end of the first half was about $ 876 million.
In 2018, Leumi sold 15% of Leumi USA's shares to the investment funds Endicott Group and MSD Capital for $ 140 million, in a transaction made at a value of $ 933 million to the acquired entity. From four years from the date of completion of the transaction to five years from the said date, if the shares purchased are not tradable and subject to additional conditions, the partners will have the option to sell (PUT option) the shares back to the bank ", so the bank has an interest in promoting the sale.

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