Rami Levy seeks to join the consortium of investors led by Mega Or Holdings (TASE: MGOR) and buy part of the controlling interest (82%) in Discount Investment, subject to regulatory restrictions. These allow Levy to buy up to 10% of the shares in Discount Investment, valued in the deal at NIS 135 million.
Discount Investment is a holding company that has among its holdings a 46% stake in telecommunications company Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL). Levy currently controls mobile carrier Rami Levy Communications, which has a network sharing agreement with Cellcom rival Pelephone.
In the light of this situation, the Ministry of Communications carried out a preliminary examination of the possibility that Levy might hold a substantial stake in Discount Investment, and was unenthusiastic about the idea, which was dropped.
Nevertheless, Levy is still interested in joining the investor consortium in Discount Investment under regulatory limits that allow anyone to hold 5% of Cellcom without the need for approval from the Ministry of Communications. Under this rule, Levy could buy 10% of Discount Investment, which he apparently intends to do. Such an investment would make it easier for Mega Or and its controlling shareholder Zahi Nahmias to complete the acquisition of 82% of Discount Investment for a total of NIS 1.1145 billion.
The entire deal has been waiting for months for approvals from two regulators: the minister of communications (because of the stake in Cellcom) and the competition commissioner (because Mega Or and Discount Investment both control shopping centers in Modi'in and Kiryat Gat). The minister of communications' approval is expected shortly, while the competition commissioner has deferred her decision to April 1.
Mega Or is due to buy 29.9% of Discount Investment and to distribute the remainder of the 82% stake among other investors. If it receives approval from the minister of communications only, it will reduce its share in the acquiring consortium to just 24.9% of Discount Investment, since such a stake does not require approval from the competition commissioner.
Nahmias seeks to bring Elco Holdings Ltd. (TASE: ELCO) into the investor consortium as a buyer 27-29.8% of Discount Investment for some NIS 400 million, but Elco is defined as a concentration group and so, besides obtaining permits from the communications minister and the competition commissioner, it will also have to obtain approval from the Concentration Committee.
Against this background, Nahmias said last week that he planned to complete the deal in two stages. In the first, only the shares not earmarked for Elco Holdings will be bought, and Elco will buy those shares in a second stage. Nahmias added that if Elco failed to obtain the required permits, the shares intended for it would be distributed to financial institutions.
Published by Globes, Israel business news - en.globes.co.il - on March 10, 2021
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