Migdal Seeks New Partner to Manage Israel's Largest Mall After Melisron Deal Falls Through

Israeli insurance giant Migdal is searching for a new partner to co-own and manage the Gold Mall in Rishon Lezion after Melisron withdrew from a planned acquisition. Melisron had agreed in September 2023 to purchase 51% of the mall for 818 million shekels, pending approval from the Israeli Competition Authority. However, the authority signaled it would likely reject the deal due to concerns about market concentration, leading Melisron to pull its application to avoid a protracted legal battle.

The Competition Authority's main concern was the impact on the national shopping mall market structure, dominated by three major groups: Azrieli, Melisron, and BIG. The Gold Mall, with 110,000 square meters of retail space, is one of the largest independent malls remaining outside these groups. The authority feared that transferring control to Melisron would reduce competition by consolidating market power further.

Melisron argued that since it currently owns no malls in Rishon Lezion or its vicinity, the acquisition would enhance competition locally. They also claimed they could invest in upgrading the mall, improving tenant mix, and attracting new brands. Nevertheless, the authority evaluates mergers based on overall market power, not just local competition, and aims to prevent gradual market dominance through successive acquisitions.

Migdal, which fully owns the Gold Mall after buying out the Gindi family stake for about 840 million shekels, now seeks a retail partner to manage and improve the property. The insurance company manages assets worth approximately 600 billion shekels but holds direct ownership of only this mall. Future potential deals with major mall operators will face scrutiny not only on geographic grounds but also on their effect on the national competitive balance.

The Gold Mall was originally developed and managed by the Gindi brothers since the early 1990s. Migdal's recent full acquisition followed a lengthy legal dispute. The Competition Authority's cautious stance reflects a broader approach to prevent market concentration before it leads to price increases or reduced competition, as explained by legal experts. This case highlights the challenges in Israel's retail real estate market consolidation.