Discount Bank and Horesh Revive Cal Deal With New Partner
Translated & summarized from Calcalist by baba
Discount Bank and George Horesh are attempting to revive a stalled deal to sell the credit card company Cal, with a new proposal involving investment firm Galatin as a controlling partner. The original deal was blocked by the Competition Authority due to concerns over Horesh's conflicting interests in Cal and Super-Pharm. This revised structure aims to address those regulatory issues, though official approval is pending. Discount Bank faces a 2027 deadline to divest its Cal holdings and is preparing an IPO as a contingency plan.
The story in 6 lines · by baba
- Discount Bank and George Horesh are exploring a new deal structure for Cal involving investment firm Galatin.
- The Competition Authority previously blocked the acquisition due to concerns over Horesh's cross-holdings in Cal and Super-Pharm.
- The revised plan involves Horesh relinquishing control of Cal to a new partner, potentially Galatin.
- Discount Bank must sell its stake in Cal by May 2027 and is preparing an IPO as a backup.
- International Bank holds veto power over any potential IPO of Cal.
- The deal's original completion deadline was November 1st, but a new structure might lead to an extension.
Discount Bank and George Horesh are attempting to revive their deal to acquire Cal, one of Israel's largest credit card companies, which had previously stalled due to regulatory concerns. The original agreement, signed in September 2023, was for Horesh and Harel Insurance to purchase Cal from Discount Bank for 4 billion shekels, with a completion deadline of November 1st. The Competition Authority had blocked the deal, citing concerns over Horesh's cross-holdings in both Cal and Super-Pharm, fearing the transfer of sensitive business information.
In a surprising development, the parties are now exploring a new structure where Horesh would relinquish control of Cal, allowing a third partner to acquire a significant stake, potentially up to 50%, and become the controlling shareholder. Investment firm Galatin, which previously held control of Phoenix Insurance alongside Centerbridge Partners, is reportedly in talks to fill this role. Galatin also holds a 15% stake in Discount New York, acquired from Discount Bank in August 2023 for $150 million.
Legal advisors believe that Horesh ceding control could satisfy the Competition Authority's concerns regarding the cross-ownership issue. The authority had feared that Union, Horesh's company involved in the deal, would gain access to sensitive data from Cal's extensive customer transaction database, which could impact competing pharmacy chains like Super-Pharm. Union had proposed measures like appointing a supervisor to the board or separating directorships, but disagreements over oversight powers persisted.
Discount Bank faces a legal deadline to sell its stake in Cal by May 2027. While Horesh and Harel would owe a NIS 187 million penalty for the deal's failure, they are motivated to find a solution. Dov Kotler, who was slated to head Cal, is leading efforts to resolve the impasse. The Competition Authority's stance on the new structure remains unconfirmed.
As a fallback, Discount Bank is preparing a prospectus for an initial public offering (IPO) of Cal, should the acquisition fail. The bank has also requested extensions from the Treasury and the Bank of Israel to sell its Cal shares, arguing it fulfilled its obligation to sell but faced regulatory hurdles. The current election period complicates legislative changes needed for such an extension. Other potential buyers, including Moti Ben Moshe and Zvi Barak, have expressed interest, but Discount Bank prefers to finalize the deal with Horesh. International Bank, holding a 28% stake in Cal, has veto power over any IPO.
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