Menora Mivtachim signs deal to buy control of Isracard

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Menora Mivtachim will be allocated 33% of the credit card company's shares at a company valuation of NIS 3.15 billion.

Israeli insurance and finance firm Menora Mivtachim Holdings Ltd. (TASE: MMHD) has signed a deal to buy a controlling core in credit card company Isracard (TASE: ISCD). After an accelerated round of negotiations last week, the details of the deal were approved by the Isracard board of directors headed by chairperson Tamar Yassur.

Menora Mivtachim will be allocated 33% of Isracard's shares at a company valuation of NIS 3.15 billion, slightly above the NIS 3.1 billion valuation offered by Menora Mivtachim, when the negotiations opened. Before the share allocation, Menora Mivtachim will distribute a dividend of between NIS 700 million to NIS 1 billion.

The signing of the agreement paves the way for the transaction to be put to the vote of Isracard's shareholders. If Isracard's shareholders approve the deal, it will also need approval by the regulators: the Bank of Israel and the Israel Competition Authority. The more important regulator in terms of approving the deal is the Competition Authority, which previously rejected Harel's attempt to purchase Isracard due to fear of harming competition in the health insurance market. Menorah Mivtachim remains the only bidder for acquisition of control after El Al Israel Airlines Ltd. (TASE:ELAL) pulled out last Wednesday.

Isracard is a publicly-traded company without a controlling core, so not making such a decision on the offer would not be problematic. However, the board of directors must act in the interest of the company's shareholders, and since the proposal offers a handsome premium compared with the market value of Isracard (NIS 2.9 billion), it must seriously examine the proposal.

Isracard's advisors in the deal are Value Base Mergers and Acquisitions headed by Yair Efrati and the Erdinast Ben-Nathan Toledano and Dalia Tal law firms.

Published by Globes, Israel business news - en.globes.co.il - on November 3, 2024.

Rami Zarneger