For French businessman Patrick Drahi, cellular operator Mirs Communications Ltd. or the international calls carrier and Internet services provider operations of 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC) are opportunities to get a significant foothold in the Israeli telecommunications market. Both are for sale. If he makes a deal, he will try to integrate the acquired business into Hot Cable Systems Media Ltd. (TASE: HOT), in which he owns a 33% stake, and has bid for more.
The key issue for Drahi is how he will merge the businesses with HOT, which would require the consent of HOT's other controlling shareholders, Eliezer Fishman's Fishman Holdings, Yitzhak Tshuva-controlled Delek Group Ltd. (TASE: DLEKG) (through Delek Investments and Properties Ltd.), and Yediot Communications Ltd.
Drahi has two options to pay for a merger. He can get cash from HOT, which has little liquidity, or get HOT shares from the other shareholders. In the latter case, Drahi will have to strike a deal over the price.
Drahi wants to acquire Mirs or Smile's operations partly based on the realization that in order to consolidate his position in the Israeli telecommunications market, he cannot wait for HOT to make the acquisitions itself. HOT has limited wherewithal, and it cannot focus on too many tasks simultaneously. HOT's other shareholders are aware of Drahi's intentions, but it is doubtful if any of them have any idea how much HOT will have to pay for them.
Eliezer Fishman is the controlling shareholder in “Globes”.
Published by Globes [online], Israel business news - www.globes-online.com - on October 26, 2009
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