Cellcom Israel has announced that it has entered into an agreement with the shareholders of domestic rival Golan Telecom for the purchase of a 100% stake in the company. Cellcom will pay ILS1.17 billion (USD301.7 million) for the smaller company, noting that the purchase price represents an enterprise value (EV) of ILS1 billion for Golan and an EV/adjusted EBITDA multiple of approximately 5.0, based on Golan’s forecasted adjusted EBITDA for 2015 (ILS204 million). Cellcom intends to finance the purchase price through a combination of equity and debt, which may include a rights offering.
Ami Erel, Cellcom’s chairman of the board, commented: ‘The acquisition of Golan Telecom will allow us to add a low-cost brand to our portfolio, and I’m confident that Cellcom’s management will be able to successfully combine Golan’s operations as the company’s low-cost brand’. Golan, which launched its operations in 2012, provides cellular services to approximately 900,000 customers (as of November 2015), with a comparatively low churn. The operator is expected to generate total revenues exceeding ILS500 million in 2015.