Israel Phoenix Assurance Ltd. (TASE: PHOE1;PHOE5) has closed its acquisition of 49% of Gama Management and Clearing Ltd. The closing was delayed for several weeks because of disagreements among Gama's previous shareholders. The settlement of these disputes enabled the deal to go ahead on its original terms agreed to by the companies just under two months ago.
Phoenix will acquire the stake in Gama for NIS 63.7 million, reflecting a company value of NIS 130 million. Phoenix has also undertaken to provide a NIS 50 million owners' loan to Gama, increasing the investment to NIS 113.7 million. This owners' loan replaces the present owners' loans of Gama's other shareholders.
The dispute among the Gama shareholders that delayed the deal involved the non-competition clause with Leumi Card Ltd., which sold its 20% stake in the company as part of the Phoenix deal. Leumi Card wants to enter the credit clearing market itself.
About 45% of Gama's customers are Leumi Card customers and independent credit card clearing by Leumi Card is liable to affect Gama's business. The parties reached agreement on the information that Leumi Card will be given on the strength of its being a former Gama shareholder.
Phoenix plans to use Gama as a platform for providing consumer credit and may also use it as a credit card company for Phoenix.
Published by Globes [online], Israel business news - www.globes-online.com - on March 10, 2008
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