Clal Insurance Enterprises Holdings (TASE: CLIS) has announced that it will buy credit card company Max from US private equity firm Warburg Pincus and its partners. Clal Insurance group CEO Yoram Naveh announced that his company would buy Max for NIS 2.47 billion. The sides have signed a memorandum of understandings as a basis for continued negotiations on a binding agreement.
Of the total acquisition price, part will be paid as structured finance, so that the net consideration will be NIS 1.6 billion. The sides have also agreed that 30% of the consideration will be paid to the existing shareholders in Max in the form of an allocation of shares in Clal Insurance Enterprises Holdings. Warburg Pincus will not become a party at interest in Clal Insurance, and will hold a 4.99% stake in it at most. Alongside Warburg Pincus, which holds 70% of Max, Clal itself is the second largest shareholder together with Menorah Mivtachim, with 9% each. Allied holds 5%, and the remaining shares are held by the employees and various consultants.
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There is no certainty that the deal will be completed, and it is subject to the signing of a binding agreement and receipt of the requisite regulatory approvals from the Bank of Israel and the Competition Authority. Clal does not, however, foresee any difficulty in obtaining approval from the regulators, among other things because the acquisition will boost competition in the provision of credit, and other Israeli insurance companies are already deeply involved in the credit industry.
Clal has for some time been trying to diversify its revenue sources alongside its insurance and investment activity. Two and a half months ago it raised some NIS 500 million in an equity offering, and some of that cash will be used to acquire Max. Assuming that the deal is completed, Max will be a subsidiary of Clal Insurance Enterprise Holdings alongside insurance company Clal Insurance.
Published by Globes, Israel business news – en.globes.co.il – on April 11, 2022.
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