Harel is on its way to acquire the credit card company Isracard, the largest company in its field in Israel. The insurance company signed a binding merger agreement according to which it will acquire 100% of the shares of Israchart in exchange for a value of NIS 2.934 billion. The transaction is subject to the approval of Israchart’s general meeting. Since it is a reverse triangular merger, Harel will have to receive the support of 50.01% of Isracard’s shareholders.
Let’s recall that Menorah Mitvathim also submitted an offer to the Harel board of directors, but this included the purchase of only the control, i.e. 32% of Israchart shares. If the transaction is completed, Isracard is expected to be delisted from the stock exchange.
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“We are happy about the signing of the deal and believe that it is good for all interested parties in Israchart,” said Harel’s deputy chairman, Ben Hamburger, who is leading the deal on behalf of Harel. “We believe that the price we offered in the deal is appropriate and fair. The price reflects a premium of 38.2% over the Israchart share price as of the day of submitting our offer. Unlike the counter offer submitted to Ischerchert, our offer is valid for 100 percent of the shares equally and not for only 32%. The counter proposal, if approved, will effectively neutralize a future control premium for the remaining 68% of the company’s shareholders. In practice, the value that we offered to the shareholders of Bisrachart reflects a premium amounting to NIS 811 million compared to only NIS 300 million of the counter offer. Regulatory approval of the deal signed with us today is limited to about 9 months, a realistic period of time by all accounts, and this is in contrast to the 60-day limit imposed on the counter-offer, which makes the chance of its completion slim.”
Hamburger added that “in addition to the premium embodied in our offer in the amount of approximately NIS 811 million, the consideration in the transaction with us also carries an interest rate of approximately 1.2% until the transaction is completed. Assuming inflation of approximately 4% per year and a completion date of approximately 9 months from today, The premium for the shareholders will increase by an additional NIS 115 million to a total of approximately NIS 935 million. On the other hand, the consideration in the competing offer is fixed and not linked.”
The Clal-Max deal also went up a notch
Last Thursday, another deal in which an insurance company purchases all the shares of a credit card company came to an end. This is after the Competition Authority announced that it approves the purchase of Max by Clal Insurance Company. However, the Competition Authority will also have to review the merger between Harel and Ischerchert.
The Competition Authority imposed one condition on the rule – it will not be able to increase its holdings above 7.5% in a banking corporation or another credit card company, either through its Nostro or through holding through the members’ funds, and this without the approval of the Commissioner of Competition, where they made it clear upon granting the approval to the rule Because the inspection she performed is specific to Clal and Max and the approval was received due to their unique data such as the size of Clal and the market share in the relevant markets of the two companies.
Therefore, the Competition Authority may find different results regarding other insurance companies. In the past, the competition authority already granted permission to a certain body to enter a new field, but other players who came after did not receive such permission due to various characteristics.