Clal Insurance announced tonight (Sunday) an intention to fully acquire the credit card company Max from the American investment fund Warburg Pincus and its partners. The CEO of the Clal Insurance and Finance Group, Yoram Naveh, announced his intention to purchase for NIS 2.47 billion, and the company reportedly signed a memorandum of understanding that would form the basis for further negotiations, pending the signing of a binding agreement.
Of the total transaction amount, there is an amount that will be paid as structured financing so that the net consideration will be about NIS 1.6 billion. It was further agreed between the parties that out of the amount, about 30% will be transferred to the current shareholders in Max as an allotment of shares in general, but Warburg itself will not become a stakeholder in the insurance company and it will hold at most 4.99%. Along with Warburg Pincus, which owns 70% of Max’s shares, Clal itself is the second largest shareholder (9%) like Menora Mivtachim. Allied holds 5% and the rest are held by various employees and consultants.
There is no certainty in the completion of the transaction, and it is subject to signing a binding agreement and obtaining the required regulatory approvals, both from the Capital Market Authority and the Competition Authority, but it is generally estimated that no regulatory problem is expected, mainly because the purchase is intended to improve Deep within the world of credit.
In general, we noted that upon completion of the transaction, Max will form an arm of Clal Holdings in favor of promoting competition in the field of credit, for small and medium-sized businesses and in the field of consumer credit. The company will in fact be a sister company to the insurance company, both of which are under Clal Holdings.
The insurance company has been trying for some time to diversify the company’s sources of income alongside activities in the insurance and investment worlds, and to pour content for the insurance company in other worlds as well. About two and a half months ago, the company raised capital by issuing shares in which it raised about half a billion shekels, and some of that money will be used to buy Max.
Yoram Naveh, CEO of the Clal Insurance and Finance Group: “The Clal Group today signed a memorandum of understanding, which is part of a strategic move aimed at expanding the group’s operations, beyond the subsidiary’s concentrated insurance and finance operations, after examining several alternatives and choosing to move forward with the nex group. “Today, we join other moves that have already been made among the institutional bodies, which are becoming a significant factor in driving competition in the field of non-bank credit.”
Yaron Bloch, Max’s chairman and senior consultant to Warburg Pincus in Israel: “I believe that Max’s connection to the Clal Group will promote competition in the credit market and the payments market in Israel, and will allow the public to offer a wide and varied fan of valuable products at competitive prices. Max, with its advanced capabilities and close relationship with customers, private and business, is an excellent platform for promoting competition in the financial system in the Israeli market. I am happy to sign the memorandum of understanding, and hope to complete the negotiations in favor of signing a binding agreement, and later receive the necessary approvals for the completion of the transaction in the coming months. “