Warburg Pincus in advanced talks to buy Leumi Card

Leumi Card Photo: screenshot
Leumi Card Photo: screenshot

An agreement to sell the Israeli credit card firm at a company valuation of NIS 2.5 billion could be signed by next week.

US private equity investment fund Warburg Pincus is in advanced talks with Bank Leumi (TASE: LUMI) to buy Israeli credit card company Leumi Card. An agreement could be ready for signing by next week. In recent days there has been a major breakthrough in negotiations with the parties' lawyers working around the clock to finalize the agreement.

Sources believe that Warburg Pincus will acquire control of Leumi Card at a company value of NIS 2.3-2.5 billion, up to 30% more than the credit card company's equity. Bank Leumi had been seeking a company value of NIS 3 billion but the talks are moving closer to NIS 2 billion due to stricter regulation and the loss of Leumi Card's partnership with the Shufersal Ltd. (TASE:SAE) loyalty club, which switched to rival Israel Credit Cards (CAL).

Despite these problems, it is looking like Bank Leumi will receive a handsome price for Leumi Card and it is expected that a dividend of hundreds of millions of shekel will be distributed to Leumi Card's shareholders (Bank Leumi 80% and Azrieli Group Ltd. (TASE: AZRG) 20%).

As far as is known, Warburg Pincus representatives have met with Israel's Supervisor of Banks and no obstacles are expected in providing a license to Leumi Card's new controlling shareholders.

Bank Leumi is required to sell Leumi Card following the Strum Committee which recommended the separation of Israel's banks and credit card companies.

Published by Globes [online], Israel business news - www.globes-online.com - on July 25, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Leumi Card Photo: screenshot
Leumi Card Photo: screenshot
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