Altice offer boosts Partner, which also mulls other options

Osnat Ronen  / Photo: Israel Hadari

Expanding Partner's fiber-optic, mobile telephone, and television activity could create more value for its shareholders.

Israeli telecom Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) reported yesterday some details of the acquisition offer by Altice, controlling shareholder in Israeli rival telecom HOT Telecommunication Systems Ltd. (TASE: HOT). The controlling shareholder in Altice is Patrick Drahi and Partner first reported the offer last week.

Partner said that the share price offered by Altice was NIS 19.11, a 27.6% premium on the known price before the offer. At yesterday's closing price on the Tel Aviv Stock Exchange (TASE), the premium is a more modest 18.5%, following the surge in the share price in recent days.

Partner's share price jumped 10.6% on Nasdaq yesterday, and is up 5% in today's TASE trading. The last time that Partner's share price was at the price in Altice's offer was in late 2018, over a year ago.

According to Partner's announcement, Altice's bid, which reflects a NIS 3.5 billion value for Partner, was in cash. Partner's current market cap is slightly less than NIS 3 billion.

Continued independent activity might contribute more

Partner currently has no controlling core, after the Saban group let go the 27.2% of the company's share capital attached in favor of Hong Kong company Hutchison, which has not yet obtained a permit for control of Partner. Israeli investment institutions also hold shares in Partner.

Partner's board of directors, led by chair Osnat Ronen, decided to consider all of the business options available to the company, including the proposed acquisition, as well as Partner's continued development and expansion as an independent company. The board hired consultants to assess the options: Goldman Sachs as an investment banker and the Ernst and Young firm as independent economic consultants.

Yesterday's announcement by Partner's board of director shows an interesting attitude towards Altice's offer; the board undertook to evaluate the offer, but decided to also consider other options. As reported by "Globes," the board of directors is trying to determine whether there are other interested entities likely to make a higher offer, and will consider whether it should expand Partner's activity through mergers and acquisitions.

The reason for this consideration is the that right step for Partner's shareholders might be for the company to expand its fiber-optic, mobile telephony, and television activity, which could bring greater value for the shareholders than accepting Altice's offer.

Afraid to compete in landline infrastructure

Altice's offer to acquire Partner has aroused the players in the communications market, who are alarmed by such a development. It was previously learned that Cellcom had conducted advanced negotiations to acquire Xfone, controlled by Hezi Bezalel. The recent appointment of Avi Gabbay as Cellcom's CEO changed its attitude, and it appears that a deal with Bezalel is not currently a high priority. Cellcom is currently considering a merger with Golan Telecom, which has major advantages for Cellcom.

Obtaining regulatory approval for a merger between Cellcom and Golan Telecom will be easier, because it detracts less from competition. As the regulators see it, a merger between Partner and Hot will severely damage competition in landline infrastructure, and the regulators will accordingly oppose it more strongly. Accelerated investments in landline infrastructure are an important consideration for the regulator, and an acquisition of Partner by the controlling shareholder in Hot will take Partner out of the market and create a duopoly with Bezeq. This is a major concern for the regulators, because Partner is a generator of competition in the landline market; if it abandons this market, investments in it will be affected.

Published by Globes, Israel business news - - on February 6, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Osnat Ronen  / Photo: Israel Hadari
Osnat Ronen / Photo: Israel Hadari
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