Israel Canada and Acro Merger Terms Improve for Buyer Amid Market Downturn

The merger between Israel Canada and Acro is nearing completion, with updated financing terms now favoring Israel Canada. Acro's controlling shareholders have agreed to defer a 310 million shekel payment until December 31, 2027, without interest, linkage, or collateral. This deferral effectively provides interest-free financing for Israel Canada, potentially saving it around 17 million shekels annually based on estimated financing costs.

This concession from Acro's owners is seen as a move to ensure the deal closes, especially given a significant market downturn since the merger was initially agreed upon in February. At that time, the combined market value of both companies exceeded 10 billion shekels, but has since fallen to approximately 7.4 billion shekels, with Israel Canada losing nearly 30% of its value and Acro about 20%.

Israel Canada has also secured an agreement in principle for a credit line of up to 600 million shekels from a local bank, at a prime to prime plus 0.3% interest rate for 24 months. The remaining cash portion of the deal, around 330 million shekels, will be funded by Israel Canada's own resources.

The original deal involved Israel Canada paying Acro shareholders approximately 1.24 billion shekels in cash and issuing about 91.95 million shares. With the 310 million shekel deferral, the immediate cash requirement for Israel Canada is reduced to about 930 million shekels, aligning with the new financing arrangements.

The deadline for fulfilling the merger's remaining conditions, including stock exchange approvals and regulatory permits, has been extended to October 25. The merger is expected to be finalized within seven business days thereafter, but no earlier than November 1. The shift in focus from the combined company's massive valuation to its capital structure highlights the impact of market conditions on the deal's final stages.