Haaretz sells Walla! stake to Sky Fund

Bezeq Internataional, another shareholder in Walla!, claims its authorization is needed for the deal to go through.

After months of negotiations, Haaretz Group has sold its 32.58% stake in Walla Communications Ltd. (TASE: WALA) to Sky Fund for NIS 88.8 million. The sale of 14.8 million shares was made at a price of NIS 6 per share, a discount on Walla's opening price of NIS 6.53, giving a market cap of NIS 297 million. The share was unchanged in morning trading.

Sky Fund, run by managing partners Zvi Yochman and Nir Dagan, has been seeking a foothold in the media market for some time. It has been in talks with Shaul Elovitch's Eurocom Group to acquire its stake in satellite broadcaster DBS Satellite Services (1998) Ltd. (YES), though no agreement has been reached, and also unsuccessfully sought to acquire the business activities of 012 Smile.Communications Ltd. (Nasdaq:SMLC; TASE: SMLC) following Smile's acquisition of the controlling interest in Bezeq The Israeli Telecommunication Co. Ltd. (TASE: BEZQ).

The sale of Walla by Haaretz cannot be finalized until Bezeq subsidiary Bezeq International Ltd. waives its right to appeal. Bezeq claimed to the courts in June 2009 that its authorization is needed for any debt or equity sale, in addition to its first refusal rights to its 34.2% of Walla. Bezeq International five days to respond.

Haaretz claims that Bezeq International is acting in bad faith, claiming that, by torpedoing a sale, it is lowering Haaretz's stake. Haaretz claims, "This is apparently an attempt by the company to acquire control from Haaretz at terms and timing that are convenient for it."

Haaretz Group, publisher of Hebrew daily "Haaretz", owes NIS 400 million, mostly to Bank Hapoalim (TASE: POLI) and Bank Leumi (TASE: LUMI). However, following the sale of a stake in the company to German publisher M. DuMont Schauberg's, Haaretz's debt has been reduced to a still burdensome NIS 250-300 million. Last year, Bank Hapoalim demanded Haaretz reduce its debt from NIS 80 million to NIS 60 million.

Published by Globes [online], Israel business news - www.globes-online.com - on March 14, 2010

© Copyright of Globes Publisher Itonut (1983) Ltd. 2010

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