Assessor evaluates Bank Hapoalim at 75% more than its market value

An external assessor has pulled the Dankner family chestnuts out of the financial furnace.

Israel Salt Industries (TASE:SALT) today advised the Tel Aviv Stock Exchange that Professor Amir Barnea has evaluated its 11.6% holding in Bank Hapoalim (TASE:POLI) at NIS 1.87 billion, excluding a control premium.

Barnea, a distinguished assessor known throughout the Israeli business scene, served as dean at the Arison School of Business at the Herzliya Interdisciplinary Center.

With a control premium included, Barnea's evaluation of the holding rises to NIS 2.15 billion, which is above the value listed in Salt Industries' books NIS 1.73 billion.

Salt Industries is controlled by the Dankner family. The market value of its 11.6% stake in Hapoalim is a mere NIS 1.07 billion, a cool NIS 800,000 less than Barnea's lower assessment.

The significance of Salt Industries' announcement is that despite the vast gap between the book and market value of its Hapoalim stake, it will not have to write down its investment in the bank.

Barnea's evaluation (without the control premium) prices Hapoalim stock at NIS 12.8, some 75% above its current trading price.

Hapoalim's shareholders equity at the end of the first quarter, 2002, was NIS 12.97 billion, making Salt Industries' share in that worth NIS 1.5 billion.

Barnea's assessment reflects a multiple of 1.24 of the bank's equity while the bank trades on the Tel Aviv Stock Exchange at an equity multiple of 0.71.

Capital market analysts say Barnea's assessment seems reasonable, and that 1.24 times the bank's equity is reasonable over the long term. However, in the short and medium term, which depend more on Israel's economic and security situation, the gap between the assessed and market value of Hapoalim's stock will remain.

Regarding the Dankners' interest at the end of the first quarter, 2002, Salt Industries' shareholders equity stood at NIS 316.2 million. Writing off even half of the gap between its book value of the Hapoalim stake, and its market value, could have reduced it to negative equity.

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