Israel mobile carrier Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL) notified the Tel Aviv Stock Exchange (TASE) this morning that it is considering buying rival carrier Golan Telecom Ltd., which yesterday announced that it is up for sale. Israel's veteran operators have been contacted on the matter by the Rothschild Investment Bank, which is seeking a buyer for Golan Telecom, and so far only Cellcom has expressed interest.
Cellcom would be a natural candidate to buy Golan Telecom, which has shut down its antenna network and today operates as a Mobile Virtual Network Operator (MVNO) on Cellcom's network. However, it is not clear from where Cellcom's shareholders would find the capital required for the acquisition, taking into account the financial situation of its controlling shareholder IDB Holding Corp. Ltd. (TASE:IDBH).
The potential merger is being led by Rothschild Investment Bank's Philippe Uzan, a former manager at Deutsche Bank Paris and a close associate of Xavier Niel, Michael Golan's partner at Golan Telecom. Uzan has been working over the past year for an acquisition deal for Golan Telecom and has met with the shareholders of Israel's largest mobile carriers in order to explain to them that Golan's strategy is to lower the value of its rivals and then take control of one of them. This has always been Golan Telecom's declared strategy and the question now arises as to why it has so dramatically decided that it is itself up for purchase.
A month ago "Globes" reported that Uzan was again visiting Israel's mobile carriers. Uzan and Golan knew the information would be leaked and it was probably to serve their purpose of putting pressure on the Ministry of Communications to grant Golan Telecom concessions about setting up its own network.
That pressure did not work and so a new step has been taken to shake up the market by announcing that Golan Telecom is up for sale.
Published by Globes [online], Israel business news - www.globes-online.com - on August 27, 2015
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