The Ticker

888 Makes $1.5 Billion Bid for Rival Gaming Company

Mizrahi-Tefahot profit falls 9% in first quarter, Super-Sol profit slumps 60% for first quarter, but Elbit profit edges up.

A Mizrahi-Tefahot Bank branch.
Moti Milrod

888 makes $1.5 billion bid for rival gaming company

The Israeli-controlled online gaming firm 888 Holdings on Monday offered to buy its bigger rival, Bwin.Party Digital Entertainment, setting up a potential $1.5 billion takeover battle with GVC Holdings. 888 did not disclose how much it was willing to pay for Bwin, but indicated it was a cash-and-stock offer. Bwin said in a separate statement that its board and advisers were conducting a detailed review of the proposals received. The smaller sports betting and gaming company GVC confirmed Friday that it had bid for Bwin, and other bidders may yet emerge amid signs of industry consolidation. Analysts said they thought 888 would come out ahead. “There’s no doubt 888 has got much more in the tank in terms of the synergy benefits of such a transaction,” Peel Hunt analyst Nick Batram told Reuters. Shares in 888 fell 1.6% to 167 pence on the London Stock Exchange. (TheMarker)

Mizrahi-Tefahot profit falls 9% in first quarter

Israel’s top mortgage lender, Mizrahi-Tefahot Bank, reported on Monday a larger-than-expected decline in quarterly profit, weighed down by a credit loss provision to protect against bad loans and higher expenses. The lender said it earned 244 million shekels ($63.9 million) in the first quarter, down 9% from 268 million a year earlier, and below the 266 million shekels forecast in a Reuters poll of analysts. It reported a provision for credit losses of 35 million shekels compared with a recovery of 5 million shekels a year earlier, while net interest income rose to 824 million shekels from 794 million shekels, even as Israeli interest rates declined. Operating and other expenses rose 6%. The bank said it will distribute an aggregate dividend of 36.6 million shekels under a new policy of making payouts of up to 15% of net profit through 2016. The bank’s Tier I capital ratio, a key measure of its financial strength, rose to 9.17% at the end of March, from 8.87% a year earlier. Mizrahi shares ended up 2.8% at 44.52 shekels. (Reuters)

Super-Sol profit slumps 60% for first quarter

Eight months after Super-Sol launched a cost-cutting plan, Israel’s largest supermarket chain looks to be worse off than before. On Monday, it reported a net profit of 13 million shekels ($3.4 million) in the first quarter, down 60% from a year earlier. Revenues edged up 1.1% to 2.84 billion shekels, from 2.81 billion, but Super-Sol attributed that to the timing of the Passover holiday at the start of April – meaning shoppers did more of their holiday buying in the first quarter ended March 31. Same-store sales rose 1%, but Super-Sol said that, discounting the Passover effect, they were down 2.1%. The food retailer has been cutting prices to remain competitive with discounters like Rami Levy, but with a higher cost structure its gross profit margin fell to 22% of revenues, from 24.7% a year earlier. Super-Sol shares ended down 0.3% at 9.11 shekels. (Yoram Gabison)

Elbit profit edges up, looks to higher U.S. defense spending

Defense electronics maker Elbit Systems reported higher quarterly profit and revenue on Monday and sees higher defense spending as helping sales going forward. Elbit earned $1.23 a diluted share in the first quarter, up from $1.22 a year earlier, though a higher tax rate weighed on the 2015 quarter. Revenue rose to $706.6 million from $682.6 million, while its orders backlog rose to $6.27 billion at the end of March, from $6.06 billion a year earlier. “U.S. defense budgets are returning to growth and this is an important market for us,” CEO Bezhalel Machlis told Reuters, adding this will be reflected in future results. Leumi Capital Markets analyst Ella Fried said the strengthening of the dollar will be fully felt on Elbit’s results only toward next year, due to hedging contracts the company has for this year. Elbit shares ended down 2.7% at 296.10 shekels ($77.24). (Reuters)

TA-25 index closes in on record high

Tel Aviv shares posted sharp gains on Monday, putting the TA-25 index within 0.5% of its record high closing. The benchmark index finished the session up 1.1% at 1,683.05 points, while the TA-100 added 1.3% to 1,458.32, on turnover of 1.54 billion shekels ($400 million). Stocks were up across the board, with communications shares leading the way (see story on this page). Among blue chips, Teva Pharmaceuticals rose 2.2% to finish at 233.70 and Israel Chemicals 2.5% at 28.40 shekels. “The Tel Aviv bourse is become bullish again after a two-week correction,” said Ofir Weisselberger, co-CEO of the Genesis hedge fund. “We now expect the market to strengthen above the resistance point of 1,695 points.” Energy shares were down, with Delek Drilling losing 1.4% to 16.90. The price of the government’s 10-year shekel bond plunged 1%, to raise its yield to 2.05%. (Dror Reich)