The Ap-Sab-Ar Holdings Ltd. (the Apax Partners-Saban Capital Group Inc.-Arkin consortium, the controlling shareholders in Bezeq (TASE: BZEQ) have exercised an option they were given when they acquired their stake in 2005 to acquire a further 10.66% of Bezeq. They paid NIS 1.08 billion.
The final date for the exercising the option wasn't until next year, which clearly indicates the confidence the shareholders have in both Bezeq's own performance and that of its share.
Another reason is for exercising the option now was that it is an optimal time for the investors to try.
The formula for exercising the option is composed of the initial share price paid by the controlling core, plus a premium for the rise in share value, but net of dividends distributed. Bezeq has distributed NIS 5.1 billion in dividends since the owners acquired control of Bezeq, and they were approaching a limit by set the formula in the amount of dividends they could set against the value when exercising the option.
Since the core group intends to distribute further dividends, they would have found themselves exceeding the dividend cap set by the formula, and would not have been able to set these against the exercise price, which is why they decided to bring the exercise forward from next year.
The sale of the government's holdings in Bezeq was completed in October 2005, when the Ap-Sab-Ar consortium acquired 30% of the company and was also given a four-year option on a further 10.66% stake for NIS 4.2 billion. The exercise of the option by the consortium will reduce the government holding in Bezeq to 5%.
Published by Globes [online], Israel business news - www.globes-online.com - on September 25, 2008
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