Ongoing negotiations between Motorola (NYSE:MOT) and minority shareholders in MIRS Communications, headed by Ampal - American Israel Corporation (Nasdaq:AMPL), are likely to end in a deal within days. Sources inform ''Globes'' that an agreement in principle has been reached over the price. Motorola will pay MIRS's minority shareholders $90 million for 33% of the company.
However, the sources cautioned that a deal had seemed close early this year, but disagreements over various issues constantly delayed the signing of an agreement.
MIRS is Israel's fourth largest wireless operator. Ampal bought a minority stake in MIRS from Motorola in January 1998 for $110 million. Three months later, Ampal sold 8% of the shares to an investor group that included the Steinmetz family, Bank Hapoalim (LSE: BKHD; TASE: POLI), First Israel Mezzanine Investors Fund (FIMI), Israel Discount Bank (TASE: DSCT), and then Ampal CEO Dr. Yehoshua (Shuki) Gleitman, (who is now CEO of SFK Technologies).
Ampal, which has since been acquired by Joseph (Yossi) Maiman, never benefited from the MIRS acquisition. Ampal found itself locked into a privately held company with no exit in sight, unable to give the company a direction. In its fourth quarter report last year, Ampal recorded a $30 million write-off on the value of its remaining shares in MIRS (25%).
Even before that, in May 2004, Ampal sued Motorola, demanding that Motorola buy back the MIRS shares for $225 million (at a company value of $766 million, or twice the value at which the shares were bought), claiming that MIRS's affairs were being conducted in a manner that disenfranchised Ampal.
In response, MIRS appealed to the court, requesting that Ampal's lawsuit be dismissed immediately, on the grounds that Ampal's claims, as well as the compensation it demanded, were baseless and groundless, and that this was an outright financial claim intended for one thing only: to get money from MIRS and its controlling shareholder Motorola.
Recently, through an joint announcement submitted by both parties to the court, Ampal and Motorola agreed that Ampal would drop the lawsuit. If negotiations between the parties fail, Ampal has the right to re-file the lawsuit within one month of announcing the termination of negotiations.
In recent months, MIRS minority shareholders have tried selling their shares to other entities in the telecommunications sector, including to Matav Cable Systems Media (Nasdaq: MATV; TASE: MATV), but without success.
MIRS has over 300,000 subscribers, and an annual growth rate of 10%. As far as is known, its EBITDA for 2004 was $30 million.
Published by Globes [online], Israel business news - www.globes.co.il - on Monday, May 30, 2005