Delek Group turns up pressure on Isracard board

The Delek Group, controlled by Yitzhak Tshuva, is increasing pressure on the board of directors of the credit card company Isracard, to encourage the board of directors to accept the takeover offer for the company. Delek Group is now seeking to acquire Isracard for NIS 3.56 billion, NIS 200 million more than its previous offer.

Isracard’s board of directors is studying other offers, one of which is worth 3.15 billion shekels from the insurance company Minora Mivtashem, and a share swap proposal from Al-Quds Bank with an estimated valuation of 3.2-3.4 billion shekels. The Board of Directors, headed by Tamar Yasur, postponed the date of the shareholders’ meeting, which had previously been postponed once to consider Al-Quds Bank’s offer, to the middle of next month.

Isracard signed an agreement with Menora Mivtachim in late October. At the time, it seemed that the offer by Menorah Mivtashem was the only serious offer in existence. In mid-December, a week before the scheduled shareholder meeting, Delek Group, headed by Idan Wallace, and Al-Quds Bank, headed by Yair Kaplan and controlled by the Shoval family, made surprise bids, and the race was reopened.

Isracard committed to paying a fine of 72 million shekels to Menora Mivtashem if it did not proceed with the agreement with it and choose another offer.

Wallace conducts the battle to seize Isracard with determination. The Delek Group offer is his initiative, and embodies the desire to diversify the group’s activity outside the energy field. Wallace filed with the Bank of Israel in June, has carefully built his takeover move over the past few months, and has no intention of backing down. This appears to be the reason behind the new offer submitted by the Delek Group, which increased by NIS 200 million.

Delek Group’s revised offer is higher than Menora Mivtachim’s valuation (NIS 3.56 billion versus NIS 3.15 billion), but the company will only partially participate in the penalty. Delek Group is offering to deposit NIS 72 million with Isracard, half of which will be forfeited to Menora Mivtachim if the deal with it does not go ahead.

The risks faced by the Isracard Board of Directors are regulatory risks. If you proceed with a deal with Delek Group, and in the end, the Bank of Israel does not grant the latter permission to retain the controlling stake in Isracard, you will lose out both ways, and will pay a fine (now reduced) of NIS 36 million. But if the deal with Minora Mivtashem goes ahead at a lower valuation than that stated in Delek Group’s offer, Isracard’s directors will be exposed to lawsuits by shareholders, who will claim that they did not maximize the value of the company. Menora Mivtashem’s bid also carries regulatory risks, as the competition authority may not allow it to take over a credit company due to damage to competition (as happened in the case of Harel’s attempt to take over Isracard last year).

Then there is the offer from Al-Quds Bank, which should not be a problem for the Competition Authority. However, Bank of Jerusalem wants to acquire Isracard (100%) through a complex share exchange deal that requires in-depth analysis, and the valuation given by Isracard, which ranges from NIS 3.2 to 3.4 billion, has been exceeded by Delek Group.

Published by Globes, Israel Business News – en.globes.co.il – on December 25, 2024.

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