The acquisition of Xfone 018 Communications Ltd. from its parent, Xfone Inc. (AMEX:XFN; TASE:XFN), by David Sela's Blokshtil Ltd. has run into a problem. Sources close to the deal said that Sela learned that Xfone 018 has additional debts that he would have to assume, which were not taken into account when he decided to acquire the company. As a result, there are now doubts that the deal will be closed.
Blokshtil acquired the Xfone 018 stake last week after very brief negotiations, which raises the question if Sela conducted due diligence on the company to the extent that is normal in the telecommunications industry. Blokshtil made a deal to acquire 69% of Xfone 018 at a company value of $10 million.
Xfone Inc.'s controlling shareholders sold their stakes in Xfone 018 without the third shareholder, Ilan Shoshani, who owns 25%. Shoshani has tag-along rights to sell his stake, but has apparently not sold it.
Sela declined to comment on the report, saying only, "Let me reply by saying, no response."
Xfone Inc.'s share rose 3.8% on the American Stock Exchange yesterday to $0.83, giving a market cap of $15 million. The share fell 0.8% by midday on the TASE today to NIS 3.08.
Published by Globes [online], Israel business news - www.globes-online.com - on November 30, 2009
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