Cal Insurance Enterprise Holdings Ltd. has announced Monday that his Israeli credit card company Max was being acquired by its controlling shareholder private equity firm Warbus Pincus LLC in a deal worth NIS 2.47 billion ($687 million).
The deal, first announced in August, which gives Clal Insurance a foothold in the Israeli credit market, will “increase competition in the consumer credit market,” Clal Insurance CEO Yoram Naveh said in a statement. Following the acquisition, Max will be integrated and operated as part of CAL’s insurance and finance company.
“For the past year, we have been working with our partners on this complex transaction, and today’s completion is a significant milestone for the group,” said Naveh.
As part of the transaction, Clal will pay NIS 1.54 billion and assume Max’s outstanding debt of NIS 800 million. Of this amount, Clal will immediately pay NIS 790 million in cash to Max shareholders in exchange for shares worth NIS 380 million on the closing date of the deal. Another NIS 370 million will be paid no later than April 30, 2024.
Max has been led by Warburg Pincus since 2019, when it was acquired by Bank Leumi le-Israel Ltd., which was required to divest its credit card business as part of a government policy aimed at encouraging competition. in the credit and banking sectors. The potential entry of a new non-bank player in the over-concentrated credit market is expected to increase competition for households and small businesses and lower credit costs.
Max chairman Yaron Bloch said the purchase of the credit card company by the Cal group is “a natural and necessary development in the industry.”
Illustrative. Series of credit cards. (alexialex; iStock by Getty Images)
It will help improve competition and expand value propositions for businesses and the consumer community in Israel,” said Bloch, a senior consultant at Warburg Pincus in Israel. “The integration into a significant and leading financial group such as Cal will position Max in an excellent starting position for its continued growth and its continued contribution to intensifying the competition.”
Clal completed the acquisition after receiving approval from the Capital Markets, Insurance and Savings Authority on Monday, and after receiving regulatory approvals from the Bank of Israel’s Banking Supervision Department and the Competition Authority in recent weeks. The Bank of Israel’s regulatory approval specifies, among other things, that the minimum holding of Cal Insurance in Max will not be lower than 30 percent.
Max will continue to be supervised by the Department of Banking Supervision at the Bank of Israel to ensure its stability and maintain fair treatment of its customers, similar to the supervision of other banks and receivers in Israel.
In another deal of insurance companies buying credit card companies MeMivtachim Holdings Ltd. and Harel Insurance Investments & Financial Services Ltd. they have made offers in recent weeks to buy Isracard, the country’s largest credit card company.
Earlier this year, Finance Minister Bezalel Smotrich announced that Israel Discount Bank Ltd., the nation’s fourth largest lender, will divest its CAL credit card business.
