Bidders for the controlling interest in Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) will submit their final offers to Hutchison Telecommunications International Ltd. (NYSE: HTX; HKSE: 2332) this week. Unless there are last-minute changes, the race is now neck-and-neck between Eurocom Group, owned by Shaul Elovitch, and Scailex Corp. ltd. (TASE: SCIX; Bulletin Board:SCIXF), controlled by chairman Ilan Ben-Dov.
International investment funds and institutional investors will probably join one of these two companies. Most international investment funds have already abandoned the race. The most serious contender is now Permira Advisers LLP, and it is struggling to submit a bid without an Israeli partner, because of regulatory issues and security restrictions imposed on it.
First Israel Mezzanine Investors Fund (FIMI) is apparently out of the race for Partner. From the first day that he entered the race, FIMI CEO Ishai Davidi said that he knew what he was willing to pay for Partner. Funds like FIMI, as well as institutional investors in general, seek exits from investments like this. In other words, FIMI wants to know now that it can sell Partner in a certain period of time at a certain return on investment.
In the current circumstances, and in view of the considerable regulatory uncertainty and technological developments in telecommunications, it is very hard to assess the risk of an investment in Partner.
Elovitch and Ben-Dov, however, are interested in a strategic investment in Partner, since both men see it as a means to expand their business. There is a consensus that Elovitch's Eurocom needs control of, or at least a major stake in, a company with a telecommunications infrastructure, beyond his stakes in satellite broadcaster YES and in Internet services provider and international calls carrier Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD) and subsidiary 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC).
Ben-Dov is aware of just how risky a deal Partner is, but he would face even greater risks if Elovitch takes over the company. Elovitch, through Eurocom Communications Ltd., is now selling cellular telephones to Partner rival Pelephone Communications Ltd. thereby cutting into to market share of Samsung cellular telephones that Ben-Dov imports through Suny Electronics Ltd. (TASE: SUNY).
Published by Globes [online], Israel business news - www.globes-online.com - on August 3, 2009
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