Union and Harel Withdraw from Cal Deal, Pay $187 Million Penalty

The Union Group, owned by George Horesh, and the Harel Group, owned by Yair Hamburger, have officially informed Discount Bank and International Bank that they will not complete the acquisition of Cal (Credit Card Company).

This decision follows the Israeli Competition Authority's ruling and the conditions it set for approving the deal. According to a report filed with the stock exchange, Union and Harel will pay the two banks a total of 187 million shekels in compensation. This payment is stipulated in the sale agreement for cases where required approvals for the transaction are not obtained.

Union will bear 150 million shekels of the penalty, while Harel will pay 37 million shekels, reflecting their respective shares in the deal. This penalty underscores the deal's failure for Horesh and his associates, who not only lose Cal but also face a significant financial penalty.

Discount Bank, which is expected to divest its Cal holdings by May 2027, is preparing for an IPO of the credit card company. The report also suggests that Union and Harel might appeal the Competition Authority's decision, though such an appeal could be lengthy and may not alter the conditions, potentially complicating the sale within the remaining timeframe.

Against this backdrop, Discount Bank is signaling its intention to seek an extension for divesting its Cal stake. However, granting such an extension is uncertain, given the bank's prior inability to complete the sale despite already receiving extensions.