Banking sources believe that Mizrahi Tefahot Bank (TASE:MZTF) will want to participate in the acquisition of the controlling interest in Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) as a shareholder, and not merely as a financier. The bank may buy 2-3% of Partner's shares out of the 51% that Ilan Ben-Dov Scailex Corp. ltd. (TASE: SCIX; Pink Sheets:SCIXF) is buying from Hutchison Telecommunications International Ltd. (NYSE: HTX; HKSE: 2332).
Such a stake would not reflect a change in Mizrahi Tefahot Bank's strategy, nor would it be used to build a portfolio of non-financial holdings. Instead, it is based on the bank's assessment that this is a good deal that could generate a short-term profit, particularly in view of aggressive dividend policy that Ben-Dov is expected to introduce at Partner following his takeover.
Mizrahi Tefahot Bank and Bank Leumi (TASE: LUMI) are due to provide the financing for the deal, with Mizrahi Tefahot Bank providing one third of the money, and Bank Leumi providing two thirds of the loan of up to NIS 2.5 billion. The loan will be smaller if Ben-Dov decides to finance part of the acquisition with a bond offering.
Commenting for the first time on the Partner deal, Mizrahi Tefahot Bank president and CEO Eli Yones said, "The acquisition of Partner is a good deal, and I'm pleased that large business enterprises are picking us as a friendly bank. Our longstanding conservative and capital planning policies have given us capital sources which, alongside our clear retail policy, enable us to be heavyweights in the business credit market."
The banks competed to finance Ben-Dov's deal. A top banker who is not part of the syndicate told "Globes" that this was a good, low-risk deal for the financing banks. "The banks will have liens on all of Partner's free shares held by Ben-Dov. Partner is also a cash cow with a strong and steady cash flow. This creates a safety cushion and very low risk for the banks."
Published by Globes [online], Israel business news - www.globes-online.com - on August 17, 2009
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