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Introduction:
Pango is back in the game with a new \$190 million offer to acquire Gett, a well-known taxi app. After facing regulatory pushback and a previous merger agreement collapse, this new structure is crafted with a focus on avoiding potential scrutiny from the Competition Authority. The deal is set to bring five investors together, each holding equal stakes in the company, effectively ensuring no one entity holds control. This creative approach could lead to a smoother and faster transaction while boosting Gett’s valuation in the process. Let’s take a deeper dive into how this new structure could reshape the future of Gett, Pango, and the market at large.
The Reworked $190M Gett Acquisition Deal
Pango, along with Leumi Partners, has restructured its \$190 million acquisition plan for Gett, overcoming regulatory roadblocks that derailed their initial merger agreement. Originally priced at \$175 million, the new valuation represents an increase, highlighting the growing appeal of the company. The revamped deal aims to avoid triggering objections from Israel’s Competition Authority, which had previously raised concerns over market competition and the concentration of power.
Unlike the initial plan, where Pango intended to gain control over Gett, the revised structure includes five investors, none of whom will have any controlling stake. Instead, Pango will hold a 20% stake, along with four other financial investors, including Leumi Partners, who will also each hold 20%. This decentralized model eliminates any single investor from wielding control, significantly reducing the risk of regulatory intervention.
Legal experts and advisors to Pango and Leumi Partners are optimistic that this structure won’t require approval from the Competition Authority, as it ensures no preferential rights or control stakes. By making this change, the deal is expected to proceed more smoothly compared to its predecessor, which was blocked due to fears of reduced competition in the market.
From Gett’s shareholders’ perspective, this deal presents a preferable alternative to a sale to Fortissimo, another potential buyer. Fortissimo would have faced scrutiny due to its existing stake in Cellopark, Pango’s competitor. The new structure also raises Gett’s value, making it more attractive for stakeholders who may have been hesitant about selling.
Gett, once a global player, now operates exclusively in Israel and the UK, after scaling back its international expansion efforts. Its largest shareholder, VNV Global, holds 43% of the company, while other investors like Volkswagen have written off their stakes. Gett’s current GMV stands at \$500 million, with an EBITDA of approximately \$17 million.
What Undercode Says: A Closer Look at the Strategic Reboot
The restructured deal between Pango and Gett marks a significant shift in the way acquisitions are handled in industries with strict regulatory oversight. By ensuring that no single investor holds a controlling stake, the deal not only reduces the risk of intervention by the Competition Authority but also sets a new precedent for future acquisitions in Israel’s tech space.
The importance of maintaining a decentralized investor structure cannot be understated. By avoiding control stakes, Pango and Leumi Partners are effectively addressing the competition concerns raised during the previous attempt. The Competition Authority had voiced strong opposition to the original merger due to the potential for reduced market competition. Now, with multiple investors holding equal stakes, this merger appears much less likely to draw such scrutiny.
However, the question remains: Is this strategy enough to prevent future regulatory hurdles? While the current structure may seem foolproof in the eyes of legal experts, it could still face challenges depending on the market dynamics. The Israeli Competition Authority may take issue with the idea of five significant players in the same industry, even if none of them hold control. This is something Pango and Leumi will have to monitor closely.
For Gett, this deal presents a rare opportunity to secure its future in a challenging market. While its past struggles and reduced valuation are well-documented, the company is still a key player in the Israeli and UK markets. With the financial backing of Pango and other investors, Gett could potentially revitalize its operations and explore new growth avenues.
Gett’s decision to continue operating in Israel and the UK also signals a shift in its growth strategy. After its failed global ambitions, Gett has pivoted to focus on its core markets, where it still holds a strong presence. The new deal structure could allow Gett to streamline its operations, improve profitability, and enhance shareholder value.
Fact Checker Results ✅❌
Claim: The new \$190M deal avoids regulatory scrutiny from the Competition Authority. ✅
Claim: The deal is structured in such a way that no single investor holds control over Gett. ✅
Claim: Gett operates in Israel and the UK after abandoning its global expansion plans. ✅
Prediction 📈
Looking ahead, the decentralized investor model introduced by Pango and Leumi Partners could become the new blueprint for similar tech mergers and acquisitions in Israel. As the regulatory landscape continues to evolve, this approach may gain traction as a way to bypass potential market concentration concerns. If successful, this deal could set a precedent for future transactions, with investors opting for decentralized power structures to ensure smoother approvals and compliance with competition laws.
References:
Reported By: calcalistechcom_2e7764f373627e42a76a4719
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