A looming power struggle at Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ) could affect the viability of the Saidoff group's deal for acquiring control of Bezeq controlling shareholder Eurocom Group. If it turns out that the Saidoff group is unable to exercise control of Bezeq by appointing the three directors it wants, this significant development will cause the group to consider its next steps, sources inform "Globes."
The appointment of Doron Turgeman, Shlomo Rodav, and Tamir Cohen to Bezeq's board of directors could signal the beginning of a major struggle for control of Bezeq, because the investment institutions holding shares in Bezeq and the Elliott Associates fund are likely to oppose these appointments, and are planning to take action to thwart them at the Bezeq general shareholders' meeting. No objections to Rodav's appointment are expected, because he is regarded as a professional appointment, but there is no guarantee that the meeting will approve the appointment of all three. If directors are appointed who will not allow the Saidoff group to exercise control of Bezeq, the group is threatening to reconsider whether the deal is worthwhile.
A senior source involved in yesterday's events at Bezeq said that Eurocom had decided to replace three directors (in the name of the designated party making the acquisition - the Saidoff group), but had done this while knowing that a vote on the appointments would be held at the general shareholders' meeting. If the appointments are not approved, other directors will be appointed in their stead. This will mean that control of Bezeq will not pass to the party holding the largest single bloc of shares in Bezeq.
Tamir Cohen is Naty Saidoff's representative, and the question of whether he fits the criteria that Bezeq is attempting to set for the appointment of directors is becoming critical, because for Eurocom (and probably also for the Saidoff group) it means that the investment institutions holding shares in Bezeq are depriving Eurocom of control of the company for which it paid a premium. This control is worth money.
Without the appointment of Cohen as a director, Saidoff will probably not go through with the deal. The same is probably true for Turgeman, the CEO of Internet Gold Golden Lines Ltd. (Nasdaq: IGLD; TASE:IGLD), which owns the controlling interest in Bezeq controlling shareholder B Communications Ltd. (Nasdaq:BCOM; TASE: BCOM). The opposition by the investment institutions and Elliott Associates is also a problem for Eurocom, because it is obligated to defend its control of Bezeq until the sale of shares in Eurcom is completed.
It can be assumed that the investment institutions will not oppose the appointment of Shlomo Rodav, in view of his record and experience, but he will nevertheless have to be approved at the upcoming general shareholders' meeting. What is therefore liable to occur is that he could be appointed Bezeq chairperson now, but be rejected at the general shareholders' meeting in May. It appears that Eurocom is gearing up to wage its final battle for control of Bezeq in the name of the Saidoff group.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 26, 2018
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