Ampal agrees to pay ILS1.2 billion for 012 Smile assets

17 Nov 2009

Ampal-American Israel Corp has agreed to acquire the operations of Israel’s 012 Smile.Communications for ILS1.2 billion (USD318 million) in the latest of a number of corporate shake-ups in the country’s telecom sector, Reuters reports. The transaction comes after 012 Smile’s parent company, Eurocom Communications, controlled by businessman Shaul Elovitch, was told it would need to divest its assets in order to gain regulatory approval for its purchase of a stake in incumbent Bezeq. Commenting on the deal, Stella Handler, 012 Smile’s chief executive said: ‘This transaction represents an important step in finalising our recently announced agreement to acquire the controlling stake in Bezeq.’

It is understood that Elovitch had also received bids from both mobile network operator Partner Communications and cableco HOT-Telecommunication Systems; Partner offered ILS1.45 billion and HOT 1.25 billion for 012 Smile’s assets. However, despite the fact that both offers were higher than the one accepted, it is believed that the decision to accept Ampal’s bid was motivated by a desire not to strengthen two of Bezeq’s main rivals, while also increasing the likelihood that the deal will be completed swiftly, due to no likely antitrust authority involvement.

For its part, 012 Smile last month agreed to buy a 30.6% stake in Bezeq, which offers fixed line voice, wireless voice and high speed broadband services, for ILS6.5 billion; following the sale of its assets the stock market shell of 012 Smile will remain in the hands of Elovitch.