Israeli insurer Menora bids to buy control in Isracard at NIS 3.07b valuation

Israeli insurer Menora Mivtachim Holdings Ltd. is joining the bidding to buy Isracard in a deal valuing the country’s largest credit card company at NIS 3.07 billion ($898 million).

Menora Mivtachim is offering to buy a 32% controlling core stake in Isracard at a company valuation of NIS 3.07 billion, or  NIS 15.34 a share, the insurer said in a filing to the Tel Aviv Stock Exchange. The offer reflects a 31.6% premium on the credit card company’s closing stock price on Thursday. Isracard shares fell 1.5% to close at NIS 11.48 in Tel Aviv on Sunday.

The bid comes after Israeli insurance and investment group Harel Insurance Investments & Financial Services Ltd. made an offer at the beginning of January to buy Isracard in a deal valuing the credit card company at NIS 2.7 billion. The offer reflected a 26.5% premium on the average stock price of the 30 trading days leading up to January 5.

In another deal of insurance companies buying credit card companies, Clal Insurance Enterprise Holdings Ltd. is in the process of buying Israeli credit card company Max from its controlling shareholder US private equity firm Warbus Pincus LLC in a deal worth NIS 2.5 billion.

Last month, Finance Minister Bezalel Smotrich announced that Israel Discount Bank Ltd., the nation’s fourth-largest lender, will need to divest its credit card business CAL. It is hoped the potential entry of a new non-bank player in the overly concentrated credit market will boost competition for households and small businesses and lower credit costs.

Government policy aiming to spur competition in the credit and banking sectors has forced Israeli banks to divest their credit card businesses in recent years. Back in 2019, the same Israeli regulation required Bank Hapoalim to sell Isracard, as part of a move to separate the banks from the credit card companies. The credit card company’s shares started trading in Tel Aviv in 2019 after Hapoalim sold a 65.2% stake in the business to institutional investors and the general public.

In view of the recent offers of insurance companies seeking to take over credit card companies, Smotrich last month announced plans to appoint a ministerial committee tasked with examining whether there is an issue with large institutional bodies having control of debit card firms.

The committee, which is expected to submit its recommendations in the next few weeks, will be set up to assess the “potential impact of recent developments in the ownership structure of the separated credit card companies,” the Finance Ministry said.