Prime Minister Benjamin Netanyahu has approved the Bezeq Israeli Telecommunication Co. Ltd. (TASE: BEZQ)-DBS Satellite Services (1998) Ltd. (YES) deal, following its approval by the Council for Cable and Satellite Broadcasting. The deal is expected to get underway soon.
Eurocom owner Shaul Elovitch is also the controlling shareholder in Bezeq, so the shares are remaining under the same ownership.
The conditions set by the Antitrust Authority for the deal establish a chain of prohibitions imposed on Yes, such as bans on content exclusivity, discrimination between customers, etc.
Under the terms of the deal, Bezeq will buy Eurocom's stake in Yes (50.2% before dilution) for NIS 680 million in cash, and will receive all of the NIS 1.54 billion owner's loan that Eurocom granted to Yes. In addition, Eurocom will be entitled to other contingent payments: one of NIS 200 million paid according to the tax synergy, and one of NIS 170 million paid according to Yes's business results over the next three years. The total payment could reach NIS 1.05 billion, depending on events.
Where the tax question is concerned, because Yes is a loss-making company, its losses can be used for tax purposes in a merger deal, subject to approval by the Israel Tax Authority. The question is how much of the amount the Tax Authority will be willing to recognize. Yes has accumulated an estimated NIS 5.5 billion in losses. For purposes of the deal, it was agreed that Eurocom would not receive more than NIS 200 million, meaning that the buyer, Bezeq, can receive tax benefits that will reduce the cost of the deal for it.
Published by Globes [online], Israel business news - www.globes-online.com - on June 23, 2015
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