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Leumi buys 5% of Cellcom for $72 million
By Globes correspondent
May 14, 2006, 09:22
Discount Investment Corporation (TASE: DISI) is selling another chunk of wireless telephony operator Cellcom. This morning, the company officially announced the sale of 5% of Cellcom to Bank Leumi (TASE: LUMI) for $72 million.
The price reflects a value of $2.07 billion for Cellcom. Discount Investment said in its announcement that it would record a capital gain of NIS 100 million in the sale.
Bank Leumi has become Discount Investments’ third partner in Cellcom, after Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) and Goldman Sachs (NYSE:GD) each bought 5%.
Discount Investments sold 5% of Cellcom to Migdal in late March for $57.4 million, reflecting a company value of $1.43 billion for Cellcom, after the company had already distributed a NIS 3.4 billion dividend. Migdal was not a beneficiary of this dividend.
In early February, Discount Investments sold 5% of Cellcom to Goldman Sachs for $103 million. Goldman Sachs became Discount Investments’ first partner in Cellcom since it acquired control of the company.
As in the preceding deals, Discount Investments undertook to issue Cellcom shares over the next two years. Discount Investments also undertook to distribute 75% of Cellcom’s profit as dividends, on the condition that Cellcom’s cash needs are not affected.
The Discount Investments-Bank Leumi deal is expected to be closed in late June, after which Discount Investments will own 80.5% of Cellcom.
Market sources believe that Discount Investments’ parent company, IDB Holding Corp. Ltd. (TASE:IDBH), wants to sell 15-20% of Cellcom to financial institutions only, because they will be satisfied with small stakes in the company.
Published by Globes [online], Israel business news - www.globes.co.il - on May 14, 2006
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