Menora Mivtachim bids again for Isracard

What is a good price for Isracard (TASE: ISCD)?The listed credit card company’s market capitalization before the start of trading this morning was NIS 2.75 billion. Yesterday, insurance company Menora Mivtachim (TASE:MMHD) offered Isracard’s management a valuation of NIS 3.1 billion, 15% more than Isracard’s market capitalization, before Menora Mivtachim enters new negotiations for the acquisition. I made an offer. Isracard’s stock price rose nearly 2% today, while Menora Mivtachim’s stock price fell just over 1%.

This bid is lower than the NIS 3.3 billion bid that insurance company Harel (TASE: HARL) made for Isracard a year ago, and Menorah Mivtahim itself was looking to buy at a valuation of NIS 3.5 billion. And so. Competition authorities ruled out Harrell’s bid, and negotiations have now resumed at an even lower valuation.

The bid came after Menora Mivtahim negotiated with investment bank Value Base, which represented Isracard. Why is the valuation so low? The reasons are clearly the war and the economic situation, which is much worse than it was a year ago. Therefore, this transaction is not very attractive to Isracard’s shareholders, and it is understandable that shareholders may reject the transaction.

Menora Mivtachim proposes to invest in Isracard through a private placement of shares embodying a valuation of NIS 3.1 billion as mentioned above. Immediately after the placement, Menora Mivtachim will hold 32% of Isracard’s shares, giving it a controlling interest. According to Menora Mivtahim’s letter to Isracard, this valuation reflects a 20% premium over the closing price on Aug. 29, when it was first approached, and includes a 60-day period prior to bidding on Isracard. The average price of the card also reflects a similar premium.

Wesure Global Tech (TASE:WESR), which owns insurance company Ayalon and digital insurance company WeSure, is also looking to acquire Isracard. Wednesday also reported that more parties are interested in the company, including Benny Alagem and a group of Israeli retailers.

As part of the agreement with Menora Mivtachim, Isracard will initially distribute a dividend of NIS 700 million. This will reduce Isracard’s valuation to approximately NIS 2.1 billion (based on current market capitalization). Menora Mivtachim will then inject the total investment amount (nearly NIS 1 billion) in exchange for an allocation of shares equal to 32% of the company. Isracard shareholders benefit from the dividends and the fact that the company’s value increases subsequently. While this is a sweet drink for existing shareholders, Menora Mivtahim also needs to get regulatory approval for the deal, which is not a foregone conclusion.

Menora Mivtahim said that after analyzing the grounds on which the competition authorities abandoned the deal with Harel, they believed there was “a high degree of certainty” that the deal would be completed, “particularly due to the structure of Menora Mivtahim’s deal.” “There is,” he said. insurance portfolio. ”

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

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