IDB Holding Corp. Ltd. (TASE:IDBH) subsidiary NetVision Ltd. (TASE: ) notified the Tel Aviv Stock Exchange (TASE) today that it had signed a merger agreement with Barak ITC Ltd. and all its subsidiaries. With this merger, IDB will create a company that will control a third of Israel’s international calls and Internet services providers markets.
Under the merger agreement, NetVision will acquire all of Barak’s issued share capital, which will constitute 46.5% of NetVision’s issued share capital. NetVision said its estimated value was NIS 621 million, and Barak’s value was NIS 456-529 million. NetVision will also acquire all of International Television Holdings Ltd’s (Tevel) stake in GlobCall Ltd.
IDB subsidiary Clal Industries and Investments Ltd. (TASE: CII) currently owns 79% of Barak, and Clal Investment controlling shareholder Discount Investment Corporation (TASE: DISI) owns 38.5% of NetVision. Discount Investment subsidiary Elron Electronic Industries Ltd. (Nasdaq: ELRN; TASE: ELRN) owns another 38.5% stake in NetVision. Discount Investment owns 48% of Elron.
If and when the merger is closed, Clal Investments will likely own 30% of the merged company, Discount Investments 26%, and Elron 19%, and they will probably reach a shareholders’ agreement.
After obtaining all the necessary regulatory permits for the merger, IDB plans to establish a single company (a single legal entity) by the end of November. The operational merger of the companies is scheduled to take until January-February 2007.
IDB has planned the consolidation of its communications companies for some time. The next natural step is a link-up of the consolidated company with Cellcom Israel Ltd., in order to provide a full range of telecommunications services via a single company. Such a move is still a long way off, and it faces many hurdles, especially from the regulators. Meanwhile, this week Cellcom announced its initial steps towards an IPO on an international bourse.
Published by Globes [online], Israel business news - www.globes.co.il - on September 7, 2006
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