News • 18.02.2020
Dramatic Deal: Cellcom Acquires Golan Telecom for NIS 600 Million
Cellcom hurried to close the agreement with Electra Consumption of the Salkind family with the aim of promoting a possible merger between HOT and Partner. The offer got preference over the one by Pelephone and includes also a waiver of a NIS 130 million debt.
By Golan Hazani
Drama on the Telecommunications Market: Yesterday the parties signed the Golan Telecom's sale transaction to Cellcom. The Calcalist website revealed that the talks between the companies ended on a positive note, and representatives of the two companies signed the agreement. Golan Telecom is currently controlled by Electra Consumer Products of the brothers Daniel and Michael Salkind.
According to the outline, it is estimated that Cellcom will pay NIS 600 million to Golan, two-thirds of which in cash and one-third in a deferred payment. Electra Consumer's board of directors, which holds Golan Telecom, approved the deal yesterday. In recent days, Cellcom has accelerated the talks to promote a possible merger between HOT and Partner.
In 2016, Antitrust Commissioner Michal Halperin rejected a previous offer by Cellcom to merge with Golan Telecom on the grounds that it would "jeopardize competition"
On Sunday, Electra Consumer Products received another offer to acquire Golan Telecom from Pelephone, Bezeq's subsidiary. Pelephone's offer was higher than Cellcom's offer - NIS 710 million (although considering the debt waiver, this offer is lower), however the board of directors of Electra Consumer Products and Gil Sharon, the CEO of Golan and the partner of Electra Consumer Products in the company, decided to move forward with Cellcom due to higher regulatory certainty regarding the deal, as opposed to a deal with Pelephone and Bezeq.
For Cellcom's CEO, Avi Gabay, who took office last month, this is a second important move for the company after signing a new agreement with the company's employees committee. The committee was notified of the details of the negotiations.
The deal is also good news for Discount Investments, controlled by Eduardo Elstein, which is managed by Eran Sa'ar. The Discount Investments shares, which hold Cellcom, soared by 30% in recent days in light of the expectations of a deal between Cellcom and Golan, and improves the company’s situation. Sa'ar and the counsel for IDB, Attorney Aaron Kaufman were involved in the negotiations with Golan.
In addition to the amount Cellcom will pay to Golan's shareholders, it will waive a NIS 130 million debt of Golan Telecom, a debt that accrued to Golan following the use of Cellcom's network. Therefore, Cellcom's offer is higher than that of Pelephone, an additional advantage explaining Golan's decision.
The deal requires the approval of the Competition and Antitrust Commissioner, Michal Halperin. In 2016, Halperin rejected Cellcom's earlier merger proposal with Golan, claiming it would "jeopardize competition in the cellular market." In January 2017, following the previous merger failure, Golan Telecom was sold by Michael Golan to Electra Consumer.