Partner Communications Co. (PTNR), Israel’s second-largest mobile phone company, and Scailex Corp. (SCIX), its largest holder, rose today on a report that Saban Capital Group Inc. is close to buying a stake in Partner from Scailex.
Partner’s shares were little changed at 23.77 shekels at the close in Tel Aviv. They earlier surged as much as 6 percent. Scailex, which holds 44.54 percent of Partner, according to data compiled by Bloomberg, surged 44 percent to 8.15 shekels on 15.4 times the three-month daily average trading volume. The shares have gained 128 percent in the past week. The yield on Scailex’s 5.1 percent bonds maturing in October 2015 dropped 153 basis points, or 1.53 percentage points, the most since Nov. 11, to 6.78 percent. The benchmark TA-25 equities index advanced 1.3 percent.
Scailex and Saban may agree this week on the sale of a stake in Partner, Calcalist reported today. Saban would acquire a 35 percent stake in Partner which the deal values at $1.2 billion, it said. Saban would assume debt of $300 million that Scailex owes Hutchison Whampoa Ltd. (13) and pay Ilan Ben Dov, who controls Scailex via Suny Electronics Ltd., another $130 million, the business daily said.
“The positive for Partner comes from Saban being an experienced, respected and involved owner who has proven his capability in the Israeli telecom sector,” Zach Herzog, head of international sales at Psagot Investment House Ltd. in Tel Aviv, said today by phone. “Scailex benefits from Saban assuming its Hutchison debt and a cash injection that will help it service its remaining debt to bondholders and potentially rejuvenate the company operations.”
Saban previously held a stake in Bezeq Israeli Telecommunication Corp. Herzliya Pituach, Israel-based Scailex said in a filing last week that it’s in “advanced talks” with Saban. Under the deal, Saban would pay cash and assume Scailex’s debt in exchange for Partner shares, while Saban and Scailex would share control of the company, it said.
Moshe Debby, a spokesman for Saban in Israel, and a spokeswoman for Scailex, who asked not to be named because of company rules, declined to comment. Suny Electronics Ltd. (SUNY), which holds a 78.71 percent stake in Scailex, according to data compiled by Bloomberg, advanced 12 percent, with investors trading 10.9 times the three-month daily average.
Standard & Poor’s Maalot said in October “there’s a risk” that Scailex won’t meet its near-term debt commitments, reiterating its ilCC rating on the company, the second-worst junk rating.
August Talks Failure
The talks with Saban followed the failure in August of an agreement with a group including Hutchison Whampoa Ltd. to buy the company. Scailex said Hutchison cited a decline in operations of Partner as a reason for pulling out of the acquisition deal. Scailex has $760 million of outstanding debt, including $300 million to Hutchison, the Hong Kong-based company said in June.
Partner shares have been the second-worst performing on the TA-25 index this year, after Cellcom Israel Ltd. (TA-25), the country’s largest mobile-phone provider, as competition in the wireless industry intensified. Hot Telecommunication System Ltd. (HOT) and Golan Telecom Ltd. entered the wireless market in May, leading to greater price competition. Partner reported a 36 percent drop in net income in the third quarter.
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