Mizrahi Tefahot in talks to buy Union Bank

Eldad Fresher Photo: Tamar Matsafi
Eldad Fresher Photo: Tamar Matsafi

With 75% of Israel's sixth largest bank for sale, Mizrahi Tefahot is considering buying control at a total valuation of NIS 1.4 billion.  

Mizrahi Tefahot Bank (TASE:MZTF) announced this morning that it is in talks to buy control of Union Bank of Israel (TASE: UNON), the country's sixth largest bank. Led by CEO Eldad Fresher, Mizrahi Tefahot said that the purchase price would be a multiple of 0.6 of Union Bank's equity at a valuation of NIS 1.4 billion, a 10% premium on the bank's current market price.

Mizrahi Tefahot's announcement comes one day after the Landau and Manor families and Dr. Yael Almog Zackai announced that they planned on joining Shlomo Eliahu by selling their shares in Union Bank.

"Subject to receiving suitable offers acceptable to each of us, we are jointly and individually considering the possibility of joining the Eliahu group by selling our holdings, which constitute the controlling core in the bank. We are considering various ways available to us for selling our holdings, and various parties are showing interest," the shareholders' joint announcement read. The proportion of shares up for sale thus grew from 27% to 74.8%.

Another candidate for acquiring Union Bank's shares is Israel Discount Bank (TASE: DSCT). In addition to the acquisition's potential and the increase in market share, however, acquiring Union Bank and merging it into the existing banks constitutes a serious challenge, and neither of the two medium-sized banks is showing enthusiasm for the deal, and they are therefore willing make the acquisition only if the price is attractive. It was previously reported that former Mizrahi Tefahot CEO Eli Yones had held initial talks with the Union Bank controlling shareholders for forming a group of investors to acquire the bank.

Eliahu has been under the obligation to sell his 27% stake in Union Bank since he acquired control of Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), because the law bars the same person from controlling both a bank and an insurance company. Eliahu has already received several postponements from the Bank of Israel for the sale of his Union Bank shares. Union Bank is traded at a capital multiple of only 0.5, and Eliahu, who wants to maximize the proceeds from his shares, is in no hurry to compromise on the price. Now that his partners in the bank are officially joining him in the sale, the chances of such a deal going forwards have improved. If no such deal emerges, Eliahu is liable to find himself forced to sell the shares on the capital market at their current price there.

Managed by CEO Israel Trau, Union Bank's market cap is NIS 1.17 billion. The bank suffers from diseconomies of scale, reflected in a poor efficiency ratio and a lower return on equity than that of the other banks. The bank faces a major challenge in disengaging from Bank Leumi's (TASE: LUMI) computer system and connecting to a new system. This difficult project is a burden for the bank.

Published by Globes [online], Israel Business News - www.globes-online.com - on July 31, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Eldad Fresher Photo: Tamar Matsafi
Eldad Fresher Photo: Tamar Matsafi
Inflation  credit: Tali Bogdanovsky Unexpectedly low February CPI reading cuts inflation

While inflation in Israel in the 12 months to the end of February 2025 is lower than forecast, housing prices continue to rise.

Yitzhak Tshuva credit: Gidon Levy and Tali Bogdanovsky Competition Authority allows Delek takeover of Isracard

The Competition Authority is considered the easier of the two regulatory hurdles that the deal must overcome, the other being the Supervisor of Banks.

David Amsalem  credit  Noam Moskowitz, Knesset Spokesperson's Office Rafael to pay state NIS 444m dividend

The minister in charge of the Government Companies Authority, David Amsalem, has approved the payment by the defense company.

Barak MX air defense system  credit: IAI IAI profit jumps 55%

Israel Aerospace Industries posted a net profit of $493 million for 2024, and ended the year with an all-time high orders backlog of $25 billion.

A TSG system in tactical use  credit: PR TSG signs cooperation agreement with US defense co

The agreement includes the integration of TSG's advanced technologies into sensor-based defense systems, which will be integrated into the operational systems of US defense units.

Bria CEO Yair Adato credit: Kseniia Poliak Israeli visual generative AI co Bria raises $40m

Bria’s Visual Generative AI platform empowers businesses to create predictable, controllable, and on-brand content that aligns with their visual language.

Amnon Shashua and Aviram Ziv credit: Eyal Izhar OrCam stymied by investor dispute with Shashua

Demands by institutional investors are blocking the visual and hearing impairment device developer's recovery plan.

Work on the Green Line credit: Bar Lavi Egged wins tender to operate TA light rail Purple, Green Lines

NTA awarded the tender to Egged, which already operates the Red Line, despite government ministry opposition to one operator for the entire network.

Gabi Seroussi illustration: Gil Gibli Board chooses Seroussi as IAI chair as Erdan freezes candidacy

Israel Aerospace Industries board chose Gabi Seroussi as chair even though he did not to go through the preliminary process of the Government Companies Authority appointments review committee.

Bavli Park penthouse credit: Eyal Tagar Tel Aviv Park Bavli penthouse sells for NIS 43m

A 44th floor penthouse in one of the two towers in businessman Yitzhak Tshuva's Park Bavli project has been bought by an Israeli businessperson.

El Al aircraft  credit: Yoav Yaari El Al pilots receive nearly NIS 250,000 bonus each

Thanks to the agreements signed with the unions in 2018, El Al's employees as well as senior management share in last year's success.

Pentera CEO Amitai Ratzon credit: Eyal Izhar Israeli security validation co Pentera raises $60m

Pentera's platform enables security teams to analyze complete attack paths, identify root causes, and prioritize remediation for effective risk reduction.

Tel Aviv credit: Shutterstock Supply of unsold new homes hits record

Israel's real estate market is sliding into recession with 78,000 unsold new apartments in January, the Central Bureau of Statistics reports.

D&B chairman Doron Cohen and Meitar partner Dan Geva Meitar reclaims title of Israel's biggest law firm

Meitar has first place with 537 lawyers, followed by Herzog Fox Neeman with 512 lawyers, according to the latest Dun's 100 rankings.

First International Bank of Israel CEO Eli Cohen  credit: Eyal Toueg First Int'l posts top return on equity

First International Bank of Israel's return on equity in 2024 was 19%, the highest among Israel's banks.

Dina Ben Tal Ganancia  credit: Guy Kushi & Yariv Fein El Al almost quintuples profit

The airline posted a net profit of $545 million for 2024, 4.7 times the profit in 2023, and an all-time high.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018