Cellcom Israel Ltd. (CEL) and rival mobile phone company Pelephone Tikshoret Ltd. are in a bidding war for Israeli mobile operator GolanTelecom Ltd., in the latest sign that the country’s cellphone market is being forced into consolidation.
Pelephone’s parent Bezeq Israeli Telecommunication Corp. Ltd., said on Sunday, Feb. 16, that it had submitted a proposal to acquire Golan for 710 Israeli shekels ($207 million) .On the same day, Cellcom, the country’s largest operator, said that it was in negotiations with Golan’s shareholders.
Cellcom did not give a value, although the Israeli financial newspaper Globes reported that Cellcom was discussing paying Golan’s shareholders nearly 600 million shekels. Cellcom would also forgive the largest shareholder Electra Consumer Products Ltd., (itself a subsidiary of Elco Holdings Ltd.) some 130 million shekels of debt, owed to Cellcom. Golan chairman and CEO Gil Sharon holds about 10% of its shares.
Both Cellcom and Pelephone have previously tried to buy Golan. Cellcom had agreed to purchase its smaller rival in 2015, only to have the deal blocked by regulators after opposition from both finance minister Moshe Kahlon and the prime minister and communications minister Binyamin Netanyahu. At that point Cellcom reached an agreement to sell the business, for a reported 350 million shekels to Electra and provided a loan to help smooth the process.
The company was founded by Michael Golan, a businessman who immigrated to Israel from France in 2007, and his partner, the French telecoms billionaire Xavier Niel. According to Boardex, a sister company of The Deal, Golan, using his French name Michael Boukobza, served as group CEO of Niel’s Iliad SA telecoms company until June 2007.
Competition among Israel’s cellphone service providers has proven fierce leaving companies struggling to find cash to invest in technology upgrades.
In January, Hot Telecommunications Systems Ltd., Israel’s sole cable company, and a subsidiary of French and Israeli businessman Patrick Drahi’s Altice Europe NV, agreed to acquire Israel’s No. 2, mobile operator Partner Communications Co. Ltd. from S.B. Israel Telecom Ltd. for an undisclosed amount.