El Al Eyeing Control of Isracard with $886 Million Offer Amid Surging Profits

El Al Israel Airlines has proposed acquiring a controlling stake in Isracard at a valuation of NIS 3.1 billion, aiming to leverage its position following a surge in share price due to a flight monopoly amid regional conflict. This move aligns with El Al's interest in expanding its frequent flyer club and credit card services, which currently serves 3.1 million members. The offer follows a similar bid from Menora Mivtachim, and the companies are set to discuss terms post-holidays.

El Al Israel Airlines (TASE: ELAL) has recently made headlines with its plans to acquire a controlling stake in credit card company Isracard (TASE: ISCD), valuing the latter at NIS 3.1 billion [1]. This move comes as El Al's share price continues to surge, boosted by the airline's near-monopoly status in flights to and from Ben Gurion Airport and geopolitical tensions [2].

The proposed acquisition aligns with El Al's interest in expanding its retail activities, particularly its frequent flyers club and credit card services. With 3.1 million members in its frequent flyers club and 414,000 holders of its Fly Card credit card, El Al aims to leverage its position in the market and enhance its offerings to passengers [1].

The offer from El Al follows a similar bid from insurance and finance company Menora Mivtachim [1]. The two companies are expected to discuss terms post-holidays, showcasing the intense interest in Isracard's assets.

El Al's successful investment strategy, led by CEO Dina Ben Tal Ganancia, has been a significant factor in the airline's recent growth. In 2020, the company's controlling shareholder, businessman Kenny Rozenberg, made a strategic investment at the peak of the COVID crisis, which ultimately proved to be a wise decision given the dramatic improvement in the company's results and the soaring share price [2].

The acquisition of Isracard is expected to bolster El Al's financial position further, as the credit card company's market cap currently stands at NIS 2.8 billion, significantly below El Al's proposed valuation [1].

References:

[1] "El Al bids to buy control of Isracard." Globes, October 16, 2024. https://en.globes.co.il/en/article-el-al-bids-to-buy-control-of-isracard-1001492066

[2] "El Al has seen its share price rise by 23% since the beginning of July." The Jerusalem Post, October 19, 2024. https://www.jpost.com/israel-news/article-814280