Ampal - American Israel Corporation (Nasdaq: AMPL) announced today the sale of its 33% stake in Israeli wireless operator MIRS Communications to Motorola (NYSE: MOT) for $89 million. The price reflects a company value of $270 million for MIRS. Motorola already owns 67% of MIRS.
The price includes $67 million in cash and $22 million in promised dividends. Ampal bought the shares from Motorola in early 1998 for $110 million, and will post a $4.1 million loss on the deal. Ampal will allocate $73.6 million of the proceeds to pay bank debts created by its purchase of the shares that it is now selling. The company also announced that the parties are withdrawing all legal claims against each other as part of the deal.
MIRS is Israel’s smallest wireless operator. It has 350,000 customers, and a 4% share of the wireless market. MIRS’s services are aimed almost exclusively at the business sector, primarily blue-collar employees in need of its push-to-talk (PTT) service. Until recently, MIRS had a monopoly in this sector. MIRS earns a profit, and has a positive cash flow.
Ampal invested in MIRS when the Steinmetz family was in control. Current controlling shareholder Joseph (Yossi) Maiman has made great efforts to sell Ampal’s MIRS stake since acquiring control in February 2002. Ampal filed suit against Motorola in May 2004, seeking to force Motorola to acquire its stake at a company value of $766 million. Sources close to the deal said that Motorola wished to dissolve its business partnership with Ampal, because it believed that Ampal was not a suitable partner in MIRS.
Ampal is an investment company, and its involvement in day-to-day management of MIRS was never extensive. Motorola, on the other hand, has the know-how needed to operate MIRS, and is also MIRS’s exclusive equipment supplier.
Published by Globes [online] - www.globes.co.il - on August 31, 2005