Israel's Competition Authority Sets Strict Terms for Cal's Acquisition
Israel's Competition Authority is imposing stringent conditions on the proposed acquisition of Cal, a credit card company, by Union Group, owned by George Horesh. Sources close to the negotiations suggest these terms are so demanding that they could effectively derail the deal, as Union and Cal are reportedly unwilling to accept them. The Authority, led by Michal Cohen, is expected to decide on the deal soon, following an extension granted until the Jewish holidays. The core of the dispute lies in concerns over potential conflicts of interest and data access, particularly due to Horesh's significant stake in Super-Pharm, Israel's largest pharmacy chain.
Key conditions include prohibiting Union Group's current and potentially past employees from serving as directors at Cal. While Cohen might show flexibility if these directors have no prior affiliation with Horesh's broader business groups, this remains a point of contention. Another major hurdle involves restricting Horesh's access to Cal's customer transaction data, especially concerning the pharmacy sector. The Authority wants to limit data exposure to published financial reports, a condition Horesh and Harel (a 20% stakeholder) are willing to accept only for non-pharmacy transactions. This is because Horesh's ownership of a third of Super-Pharm, which also partners with Cal on its customer loyalty program, raises concerns about unfair competitive advantages.
A third condition involves appointing a neutral supervisor or observer to Cal's board, tasked by the Authority with monitoring data flow between Cal, Union, and Super-Pharm. While Union and Cal are amenable to this, disagreements persist over the supervisor's exact powers, representing the most significant sticking point. The deal, initially agreed upon a year ago with a NIS 4 billion valuation, has faced numerous regulatory delays. Discount Bank, the seller, is reportedly preparing for a potential IPO of Cal in 2027 if the current deal collapses, and the obstacles are expected to lead to a NIS 300 million reduction in the deal's price.
Market speculation about the deal's failure has prompted other potential buyers to organize. Notably, Gideon Tadmor, a prominent businessman, has been approached to lead an investment group. However, Tadmor and others are unlikely to make formal moves until the current acquisition is definitively off the table. The Authority's approval is also significant because it would allow Cal to pursue a small bank license, a move supported by the Bank of Israel, as International Bank sells its stake in Cal as part of the transaction.
