Mega Credit Card Deal Collapses, Banks to Receive $187 Million Payout

A massive deal to acquire the Israeli credit card company Cal has officially fallen apart. Union Group, owned by George Horesh, and Harel Group, led by Yair Hamburger, informed Bank Discount and Bank Leumi on Wednesday that they would not complete the purchase. The decision stems from stringent conditions set by the Israel Competition Authority, which made the acquisition financially unviable for the buyers.

As a result of the withdrawal, the parties will enact a pre-agreed compensation mechanism. The buyers will pay the banks a total of 187 million shekels. Union Group will pay 150 million shekels of this amount, while Harel Group will cover the remaining 37 million shekels, proportionate to their stake in the deal.

The cancellation places Bank Discount under significant time pressure, as the legal deadline for divesting from Cal is May 2027. While the potential buyers are considering an appeal against the Competition Authority's decision, a lengthy legal process with uncertain outcomes, Bank Discount is already exploring alternative strategies. These include potentially listing Cal on the stock exchange and possibly seeking an additional extension from the government to finalize a sale.

This collapse marks a significant setback for Bank Discount's efforts to comply with regulatory requirements mandating the separation of banks from credit card companies. The deal, valued at billions of shekels, was intended to be the solution for this regulatory challenge.