Menora Mivtachim bids again for Isracard

What is the right price for Isracard (TASE: ISCD)? The market value of the listed credit card company before this morning’s opening was NIS 2.75 billion. Yesterday, insurer Menora Mivtachim (TASE: MMHD) submitted an offer to manage Isracard based on a valuation of NIS 3.1 billion, 15% more than Isracard’s market capitalization before Menora Mivtachim entered into renewed negotiations over its takeover. Isracard’s share price is up almost 2% today, while Menora Mivtachim’s share price is down just over 1%.

The offer is lower than the NIS 3.3 billion bid made by insurer Harel (TASE: HARL) for Isracard a year ago, which Menora Mivtachim itself sought for NIS 3.5 billion. The Competition Authority has ruled out Harrell’s offer, and negotiations are now being renewed at a lower valuation.

The offer comes after Menora Mivtashem held negotiations with investment bank Value Base, which represents Isracard. Why is the rating lower? The explanation seems to be war and the economic situation is much worse than it was a year ago. Therefore, the deal is less attractive to Isracard shareholders, and they may of course reject it.

Menora Mivtashem proposes to invest in Isracard through a private placement of shares, as previously mentioned, worth NIS 3.1 billion. Immediately after the offering, Minora Mivtashem will own 32% of Isracard shares, which will represent a controlling interest. According to Menorah Mivtashem’s letter to Isracard, the valuation reflects a 20% premium to its closing price on August 29, when it first introduced its approach, and a similar premium to Isracard’s average price in the 60 days preceding the offering.

Wesure Global Tech (TASE: WESR), which owns insurance company Ayalon and digital insurance company WeSure, is also seeking to acquire Isracard. We also reported that additional parties are interested in the company, including Benny Al-Ajam and a group of Israeli retailers.

As part of the deal with Menora Mivtachim, Isracard will first distribute a dividend of NIS 700 million. This will reduce the value of Isracard to approximately NIS 2.1 billion (based on its current market capitalization). Menora Mivtashem will then inject its investment amount (about NIS 1 billion) in exchange for the allocation of shares of up to 32% of the company. Isracard shareholders benefit from the dividends, and from the fact that the value of the company will subsequently grow. This is a bit of a sweetener for existing shareholders, but Menora Mivtashem will also have to get regulatory approval for the deal, which is not a foregone conclusion.

Menora Mivtashem says that after analyzing the reasons for the Competition Authority’s cancellation of the deal with Harel, it believes there is a “high degree of certainty” that the deal will be completed, “among other things because of the structure of Menora Mivtashem.” Insurance portfolio.”

Published by Globes, Israel Business News – en.globes.co.il – on October 10, 2024.

© Copyright Globes Publisher Itonut (1983) Ltd., 2024.