Competition Authority changes direction: Close to approving the sale of CAL to Horesh and Harel

A turnaround in the final stretch: The Competition Authority is expected to soon approve the sale of the credit card company CAL to Union of George Horesh and Harel Investments, controlled by Yair Hamburger. Calcalist has learned that the change in the Authority's position occurred after the dramatic meeting that took place two weeks ago.

After the completion of the deal, Union will hold 80% of the shares, while Harel will hold 20% of the shares. At that meeting, senior officials of CAL, Union, and Harel presented certain solutions to the Authority's concerns regarding the cross-ownership of Horesh and Union in both CAL and Super-Pharm, in which Union holds a third of the shares. Super-Pharm is the largest player in Israel in the pharmacy sector, and Shufersal owns the competing chain BE, while CAL is a partner with it in the chain's customer club and operates its credit cards.

The concern in the Authority is that information about consumption habits in the pharmacy sector and about BE customers will flow smoothly to the competing Super-Pharm due to Horesh's cross-ownership. 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.

As recalled, last month it was revealed in Calcalist that the Authority had conveyed a message to the buyers that it would not approve the deal unless CAL disconnected from the Shufersal customer club. For CAL and the buyers, this is a heavy blow, as this year the credit card company lost the profitable Fly Card club of El Al, which moved to Isracard. The loss of a second club, even larger in number of members than Fly Card, would have made the deal unprofitable due to the severe damage to CAL, with the loss of its two main clubs, and would likely have led to its collapse. As far as is known, CAL with Shufersal and without Fly Card is a deal that will lead to a price of 3.7 billion shekels for it, without the upside that would bring the value to 4 billion shekels.

Following the Authority's announcement, representatives of CAL, Discount, Union, and Harel requested an urgent meeting to convince the Authority. This is effectively a kind of hearing before a decision is made. Among the proposals raised by the parties to the deal at that meeting, which took place at the beginning of July at the Authority's offices in Jerusalem and in which Michal Cohen, the head of the Authority, also participated, were commitments to disconnect from access to the strategic plans of the Shufersal customer club, which issues the CAL card, not to be involved in marketing and advertising budgets, as well as other restrictions.

The team at the Competition Authority handling the approval of the deal has held additional discussions since then, and recently the Authority conveyed indications to Union, CAL, and Discount that the deal would be approved under soft conditions. That is, CAL will not be forced to part with the Shufersal club, but restrictions will be imposed and conditions will be set regarding the information that the club generates and the ways it is used. This is after it was convinced, apparently, that the buyers would not have access to the marketing data of the BE chain and the data of the Shufersal club.