Apax, Saban make $1bn call on Israel

The acquisition of a 30 percent stake in Israeli telecoms company Bezeq by a private equity consortium is the largest privatisation seen in the country so far this decade.

A private equity consortium including Apax Partners, Saban Capital Group (SCG), the LA-based firm founded by media entrepreneur Haim Saban, and local businessman Mori Arkin has acquired a 30 percent stake in Bezeq, Israel’s largest telecoms company. The syndicate agreed to buy the stake from the country’s government in a transaction valued at Shk4.23 billion ($970 million, €754 million).

This is Israel’s largest privatisation since the late 1990s, when the programme stalled because of global economic problems and a worsening in hostilities with the Palestinians.

Under the deal, Arkin will hold 10 percent of the stake, while Apax and SCG will hold 45 percent each.
 
The deal includes an option for the syndicate to raise its overall interest in the company by acquiring a further 10.7 percent, according to a statement.
 
If the consortium exercises its option, the government will retain only 1 percent of the company. Israeli telecoms group Zeevi Communications already owns 17.8 percent and Bezeq’s employees 4.7 percent. The remaining 35.9 percent is listed on the Israeli stock exchange in Tel Aviv.
 
This is Israel’s largest privatisation since the late 1990s, when the programme stalled because of global economic problems and a worsening in hostilities with the Palestinians. The programme began moving again with a series of small privatisations late last year.

Haim Saban, founder, Saban Capital Group


 
In addition to being Israel’s monopoly fixed-line operator, Bezeq also operates the mobile phone unit Pelephone and owns half of the satellite television company YES. In 2004 the company’s net profit was Shk621 million and it had revenues of Shk9.27 billion.
 
According to press reports, the Apax-Saban-Arkin consortium beat off a rival bid led by Whitepoint Communications, a US investment vehicle run by former Packard Bell CEO Beny Alagem. This consortium included two Los Angeles based firms, Canyon Capital and Clarity Partners, and Israeli insurer Phoenix. According to local media, Whitepoint’s final bid was $872 million.