Conditions of the Competition Authority for approving the CAL deal are revealed
The Competition Authority has set strict conditions for approving the acquisition of CAL by the Union group and Harel. Parties are in negotiations, but disagreements over control and data access threaten the deal's completion.
"The conditions set by the Competition Authority are not simple. Their meaning is that George Horesh will acquire CAL, but in practice will not control the company. Under these conditions, there will be no deal," said a source close to the contacts between those involved in the CAL deal and the Competition Authority yesterday.
The Authority is expected to decide in the coming days whether to approve the deal, under which the credit card company will be sold to the Union group (80%) and Harel (20%). This follows another extension granted until the holidays. Michal Cohen, who heads the Authority, is willing to approve the deal, but under certain conditions and under various mechanisms. However, Union and CAL are not willing to accept the conditions, and Discount Bank, which is also a party to the deal, although showing some flexibility in accepting them, is on the seller's side, and its position is less relevant.
It has become known to Calcalist that the conditions include a prohibition on current Union personnel, and probably also former ones, from being directors at CAL. Cohen is willing for the directors in the company on behalf of Union to be those who have not worked in Horesh's groups in the past. On this issue, there may be some flexibility from the Authority.
Problematic aspects of the deal
The problematic point: cross-holdings in pharmacy chains. A second limitation is receiving information from Horesh and his people about the transactions of CAL customers. The Authority wants to prohibit the receipt of current information, and exposure to information only upon the publication of financial reports. Horesh and Harel are willing to accept the limitation, but only regarding transactions in the pharmacy field. Why pharmacy? Because one of the problematic points in Horesh's acquisition of CAL is his holding of a third of the shares of Super-Pharm, the largest pharmacy company in the country. Shufersal holds the competing chain to Super-Pharm, BE, and in addition holds, together with CAL, its customer club. CAL is the one that operates Shufersal's credit cards.
A third limitation is the appointment of a neutral supervisor or observer on the CAL board of directors, who will be determined by Michal Cohen and the Authority, and whose role will be to supervise the information passing from CAL to Union and Super-Pharm. Horesh's Union and CAL are willing to accept this limitation, but there are disagreements about what the observer's powers will be. In fact, this is the point on which there are the greatest disagreements between the parties.
The Authority's decision was supposed to be made a week or two ago, but was postponed at the last moment to provide another, final opportunity to bridge the gaps. Horesh and Union, as well as Discount to some extent, through their lawyers, are exerting enormous pressure on the Authority in an attempt to get it to be flexible and save the deal. In the coming days, it will become clear if the pressure worked.
The agreement for the sale of CAL was signed a year ago, in September 2025. To this day, regulatory approvals for it have not been received, with several extensions to the contacts between Union, CAL, and Discount and the Competition Authority, which have been going on for many long months. As published in Calcalist in June, the Authority conveyed a message to the buyers that it would not approve the deal unless CAL disconnects from the Shufersal customer club. The Shufersal club gives CAL access to broad information about the chain's customers, their purchasing patterns, and the uses they make of the credit card.
The Competition Authority fears that a credit card company like CAL sits on mountains of information, sometimes such that even Shufersal itself does not have in full: transactions outside the chain, consumption habits, purchase categories, frequency of purchases, and expenditure amounts. A month later, and after two meetings between the parties, Cohen agreed to waive this limitation, but not the other limitations. Cohen fears the excess advantage that Super-Pharm will receive over its competitors through the information to which it will be exposed from CAL and the transactions of its customers, and therefore sets the strict limitations.
Banking aspects and alternatives
CAL is held by Discount Bank (72%) and First International Bank (28%). From the Authority's point of view, the advantage of the deal is also the fact that in its framework, the First International Bank will sell its shares. Then CAL will be able to request and receive a small bank license — a move that the Authority supports, as it is interested in creating as many new banks as possible. According to the current legal situation, as long as the First International holds CAL shares, the latter cannot receive such a license. This issue has significance for the Authority. This is also one of the reasons why the Bank of Israel is an enthusiastic supporter of the deal.
The obstacles may lead to a discount of 300 million shekels. It was also learned by Calcalist that the Discount board of directors, out of readiness for the situation that the deal might hit a snag, instructed the bank's management to prepare for an IPO of CAL in the second or third quarter of 2027, and to start writing a prospectus for the IPO. Discount is obligated to sell its holdings in CAL by May 2027. The IPO, if it happens, will be led by Discount Underwriting.
The obstacles on the way to the deal are expected to lead to a discount of 300 million shekels for Horesh and Harel on the original deal price, which stood at 4 billion shekels, and this concerns the part of the payment that is future and conditional on targets. Horesh is expected to demand an additional discount if he nevertheless reaches agreements with the Competition Authority on the limitations, so that even between the buyers and sellers there are certain disagreements. But it has become known to Calcalist that the market estimates that the CAL deal will not be completed have led various players to organize groups to purchase CAL instead of Horesh. Thus, for example, it was learned that factors in a group being organized approached Gideon Tadmor, the controlling shareholder of the oil company Navitas, to lead the investment together with several institutional and private entities. Tadmor, who is apparently examining the issue, will not take a formal step, as well as other businessmen who are examining the purchase, before it becomes clear that the deal has finally fallen through. If Tadmor starts trying to purchase, it will be an interesting situation, since Yitzhak Tshuva, under whom Tadmor grew up as a manager, holds through the Delek group a competitor, Isracard.
The collapse of the deal could complicate Discount and lead to lawsuits from shareholders. Discount chose to sell CAL to George Horesh and Harel at a base value of 3.75 billion shekels (with mechanisms for completion to 4 billion shekels), even though Moti Ben-Moshe offered 4.18 billion shekels. Already at the time, the question arose as to how the Discount board of directors could justify choosing a significantly lower offer. In addition, it was clear that Horesh might have a problem because of the holding in Super-Pharm. This is in contrast to Ben-Moshe, who has no competing holdings.
