Bank Leumi and the Azrieli Group agreed to sell Leumi Card to funds affiliated with private equity fund Warburg Pincus for NIS2.5 billion ($682 million).
The payment will be adjusted for a possible dividend distribution and be paid in three installments: the first on the transaction’s completion date, the second one year after the completion date and the third two years after the completion date.
According to the agreement, Bank Leumi may receive an additional income of up to NIS273 million ($74.485 million) beyond the sale price, subject to certain terms and conditions, including Leumi Card’s overachieving results outlined in the business model presented to the buyer.
At close, Leumi Partners, a wholly-owned subsidiary of Bank Leumi, will have the option of acquiring up to 20% of the corporation through which Warburg Pincus will purchase Leumi Card. The exercise of the option is subject to obtaining the required regulatory approvals.
Subject to the transaction’s completion, Bank Leumi is expected to record an after-tax profit of NIS234 million ($63.845 million).
Rakefet Russak-Aminoach, Leumi president and CEO, commented, “I am pleased with the excellent results of a responsible and professional process we have led over the past few months. Due to the importance of Leumi Card and its services to customers, we endeavored to find a reputable buyer with extensive experience in finance and payments. Warburg Pincus’s experience will assist Leumi Card in realizing its business strategy and ensure innovative, high-quality and professional service to its customers.”
Daniel Zilberman, managing director and head of Europe, Warburg Pincus, added, “We are excited to partner with Leumi Card in the next phase of the company’s growth. The Israeli payments, consumer finance and SME lending markets present considerable opportunity, and we look forward to working closely with CEO Ron Fainaro and his talented management team.”
