In line with the consolidation trend among Tel Aviv Stock Exchange (TASE) members, Meitav Dash Investments Ltd. (TASE:MTDS) is on the way to swallowing up the Bank of Jerusalem (TASE: JBNK) subsidiary for securities trading, which is a TASE member. The acquisition is therefore expected to reduce the number of TASE members from 23 to 22, a continuation of a multi-year trend that has affected mostly non-bank TASE members. There are several reasons for this trend, including the intensification of competition among the banks' TASE members, together with a rise in the requirements applying to TASE members, which constitute a substantial burden for small firms.
The acquired company is a bank member of the TASE that was formerly a non-bank member. Meitav Dash reported that it was in advanced negotiations to "acquire the Bank of Jerusalem's securities trading business from the bank." Meitav Dash added, "The deal, if it goes through, is not expected to have a material effect on the group's business."
Bank of Jerusalem added, "According to the discussions between the parties up until now, the proceeds for the activity being sold to be paid by the buyer to the bank will be NIS 21 million."
The parties have not yet signed any binding agreement, although no particular problem in completing this deal is anticipated.
Fifth merger in a few years
At the end of 2013, Clal Finance Batucha, the brokerage business of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS), was merged into Bank of Jerusalem. Clal Insurance, a former market maker, lost ground over the years. In the same deal, Bank of Jerusalem acquired the business of Clal Finances, in addition to the TASE member it also owned.
This will be the fifth acquisition of a TASE member within a few years for Meitav Dash, managed by CEO Ilan Raviv. The Meitav Dash TASE member is actually a combination of several TASE members merged into it over the years. It began with Gaon Trade, continued with Yashir Investment House, and was followed by the merging of Meitav Dash's TASE member and that of A-Broker Trade & Securities Ltd. (which formerly belonged to Harel), and now the merger with Bank of Jerusalem's subsidiary. In other words, the Meitav Dash TASE member is used to growing through mergers and acquisitions, and has done it in a broad range of endeavors.
The logic for Meitav Dash in acquiring Bank of Jerusalem's TASE member is strengthening its retail business - the arm for trading with private traders on the capital market, not with the investment institutions.
The consolidation trend is not confined to Meitav Dash. Another big deal was closed when IBI Investment House merged the TASE member of Migdal Capital Markets into itself in late 2015. There are now therefore quite a few non-bank TASE members owned by the leading investment houses: the TASE members owned by Meitav Dash, Poalim IBI, that of Excellence Investments Ltd. (TASE: EXCE) (the subject of a criminal investigation by the Israel Securities Authority that has yet to be cleared up), and that of Psagot Investment House Ltd..
At the same time, the TASE is hoping that new members will join, after a number of non-bank members left the TASE in recent years. The TASE is working toward its first new member with a retail and digital orientation. Recently mentioned in this context was online insurance agency Wobi. It was also reported that international group Interactive Electronic Brokers was planning to join the TASE as a remote member.
Published by Globes [online], Israel Business News - www.globes-online.com - on September 17, 2017
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