Gil Sharon, Elco pull out of Golan acquisition

Gil Sharon Photo: Tamar Matsafi

The only potential buyer left in the race for Golan Telecom is Hezi Bezalel.

The group of investors led by Gil Sharon and Elco Holdings Ltd. (TASE: ELCO) has withdrawn from the race to acquire control of Golan Telecom Ltd., leaving Hezi Bezalel the sole candidate for the acquisition.

"Globes" reported in recent days that the Sharon-Elco group was negotiating to acquire control of Golan Telecom. The acquisition would have included payment of the Golan Telecom's large debt to Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL). Tel Aviv Stock Exchange (TASE) investors liked the negotiations between the investors groups, and the Cellcom share price rose substantially. Over the past hour, when the failure of the negotiations became known, the trend in the Cellcom share changed to downward.

The negotiations between Golan Telecom and the Sharon-Elco group included payment of NIS 300 million for Golan Telecom and assumption of Golan Telecom's NIS 600 million debt to Cellcom. The debt to Cellcom would have been spread over a 10-year period, with Elco paying Cellcom NIS 220,000-250,000 a year for the use of its network and for an agreement to consolidate networks that would have given it 50% ownership of the Cellcom network. Gil Sharon was in line to be appointed chairman.

Had the deal come off, Golan Telecom owner Michael Golan would have received NIS 300,000 and exited the Israeli market with his tail between his legs. According to estimates by Michael Golan himself, which the cellular companies regard as accurate, he has invested NIS 400 million since Golan Telecom was founded. In the end, even if the price had been higher than NIS 300 million, it appears that the Golan Telecom shareholders stand to lose money on their Israeli adventure, and certainly in comparison with what they had hoped to get from a sale of the company to Cellcom, which was willing to pay NIS 1.2 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

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Gil Sharon Photo: Tamar Matsafi
Gil Sharon Photo: Tamar Matsafi
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