Isracard Cancels Digital Bank Esh Acquisition Deal Led by Nir Zuk

Less than six months after announcing its intention to acquire the digital bank Esh, Isracard declared that the deal is off. The credit card company reported to the Tel Aviv Stock Exchange that the memorandum of understanding with Esh's shareholders expired without a binding agreement, ending negotiations without a transaction.

Esh was co-founded by entrepreneur and tech figure Nir Zuk, known for his role in cybersecurity giant Palo Alto Networks, who holds about 20% of the bank's shares. Alongside Zuk are founders Yuval Aloni, Alex Livernet, and Shir Reanan, collectively owning 45%, as well as Alon Shine, Professor Shmuel Hauser, Clal Insurance, company employees, and private investors. The acquisition, signed in March, valued Esh at up to 500 million shekels, with most of the payment planned through Isracard shares issued to Esh shareholders, plus additional compensation tied to business targets. Isracard also intended to invest around $40 million in eOS, the technology company behind Esh's banking core system.

With the deal canceled, Esh must reconsider its independent path. The bank's leadership recently promoted a new banking model featuring no fees on current accounts, sharing half of interest income with customers, and fixed interest on deposits, aiming to attract clients from major banks. Meanwhile, Isracard loses a strategic opportunity to enter banking ahead of upcoming reforms allowing "lean banks" in Israel. This move was seen as one of Isracard's most significant strategic initiatives in recent years. Isracard, controlled by the Delek Group of Yitzhak Tshuva, has seen its stock decline about 31% since the start of the year and currently holds a market value of approximately 3.52 billion shekels.