Last Friday, Bezeq (TASE: BZEQ) completed its acquisition of Shamrock Holdings’ 50% stake in wireless telephone company Pele-Phone, thereby becoming its sole owner. The deal became possible when the Antitrust Authority granted final regulatory approval last Thursday. At the same time, Pele-Phone CEO Yacov Gelbard extended his commitment to continue in his position by two years beyond the three years already agreed, until the end of 2006.
Bezeq will pay $60 million for the shares, and will also repay Shamrock’s $392 million loan from Bank Hapoalim (LSE: BKHD; TASE: POLI). Shamrock took the loan to finance its acquisition of Pele-Phone shares from Motorola (NYSE: MOT). Bezeq also gave Shamrock $255 million in bonds, including interest. In all, Bezeq paid Shamrock a total of $707 million. Bezeq and Shamrock also each received a $4.15 million dividend.
The deal was at a company value of $1.42 billion for Pele-Phone, agreed between Shamrock and Bezeq when the deal was signed over three years ago. The value seemed low at the time, while today it is higher than Pele-Phone’s estimated value, following the subsequent changes in the wireless industry and valuations of operators around the world.
The acquisition was part of an option agreement signed by Bezeq and Shamrock in November 2000, when Shamrock acquired Motorola’s 50% stake in Pele-Phone at a company value of $1.2 billion.
Published by Globes [online] - www.globes.co.il - on August 29, 2004