Gilo stymies Delek Auto and Kamor Motors merger
Antitrust Commissioner frowning at one of largest merger deals in Israel's auto market, in which Mazda and Ford importer Delek Auto was slated to acquire BMW importer Kamor at a valuation of NIS 253 million
Israel's Antitrust Commissioner David Gilo will not green light the merger between Delek Auto and Kamor Motors. Calcalist learned that Gilo shared his stance on the mater with the executive managers who took part in a hearing at his office yesterday.
Gilo's reasoning was that he was concerned over the possibility that the merger would "contribute to a non-competitive equilibrium" on the auto market – an antitrust term which means that importers would be able to fix prices.
Delek Auto execs disagreed with Gilo claiming that on the contrary, the merger would increase competition and drive down prices as it would bring another strong player into the auto market. To the best of Calcalist's knowledge, the merger gained the support of less senior elements at the Antitrust Authority, although a denial of this was posted yesterday.
Efforts are underway in both companies to sway the commissioner to agree to the merger and provide him with additional information that may change his opinion. The commissioner will probably form his final recommendation in a few days' time.
The merger deal in question was already inked in July whereby Delek Auto, controlled by Gil Agmon and the Delek Group, was to acquire Kamor's controlling interest from Dan Brenner. Delek Auto was to acquire 64.21% of Kamor for NIS 162 million reflecting a valuation of NIS 253 million for Kamor.
Kamor wants family cars; Delek wants luxury cars
Kamor Motors is the Israeli distributor of BMW luxury motorcycles and cars. Kamor's competitive edge in Israel's auto market has been impaired due to the fact that it is not backed up by a family car importer and therefore, it deems the merger a sensible move.
Delek Auto represents Mazda and Ford in Israel, and offers three car classes: compact, family and executive. The acquisition of Kamor aimed to complement its product line and enable the company to make inroads in the luxury car sector.
The deal would need Mazda's and Ford's stamp of approval as Kamor is also the concessioner of Chery International – a Chinese manufacturer of affordable cars which might compete in the same auto class once European standardization permits come into effect.
Pessimism among analysts
The merger received accolades at the time from analysts. Bank Hapoalim changed Delek Auto share's rating to overweight at a target price of NIS 48 – 31% higher than its price on the market at the time, noting that Kamor's tire imports will add a growth engine to Delek Auto.
This week, although, they made an about-face and Psagot Investment House slashed the share's target price to NIS 28 (its current price) and posted a sale recommendation for the share. In this case as well, the dropping Yen led analysts to post bleak forecasts for the company's upcoming fiscal quarters.
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