Avi Gabay, CEO Cellcom The retiree is required under his contract for a cooling-off period of one year in the event of a transfer to a competing company, Globes has learned. As far as is known, Gabay intends to compete for the acquisition of control of the competing communications company partner (Along with teachers Arkin, Shlomo Rodev and institutional bodies) to submit an application to the Cellcom board of directors to shorten the cooling-off period or remove it altogether. In the event that the application is submitted, the Cellcom Board of Directors will discuss it and make the decision in favor of the company’s shareholders.
Gabay announced this week his resignation from the position of CEO of Cellcom after almost two years in the position, as stated against the background of his intention to join the group that intends to acquire the controlling interest in Partner (about 27%) – shares currently held by a trustee. At the same time, they are perceived as an exceptional event and therefore the question of cooling has arisen. , Or the issue will be raised by one of the directors. With the departure of Cellcom, Gabay waives the benefit of millions of shekels in options that he was supposed to receive during his tenure.
It will be recalled that in the past there were a number of transfers of senior executives in the communications market from one company to another competing company in short periods while giving up the cooling, and it is not inconceivable that this will also be the case with Gabay. For example, Stella Handler moved from the position of Chairman of the Board of Hot to the position of CEO of Bezeq, when Hot actually waives her cooling-off period. Gil Sharon, who currently serves as chairman of Bezeq’s board of directors, also moved from Golan Telecom, which he managed, while Cellcom, headed by Gabay (which acquired Golan), also waives the cooling-off period.
As mentioned, Gabay is expected to join a group of investors that will lead, together with Arkin and Rodev, to purchase the Chinese Hutchison shares in Partner (27.1%). These shares are currently held by a trustee so Partner has no controlling shareholder.
Partner is traded at a market value of NIS 3.7 billion (the stock jumped 9% on Sunday following the announcement of the takeover intention). This value gives Hutchison shares for sale a value of close to NIS 1 billion.
Preference for quick and smooth stock sale
The Gabay-Arkin-Rodev group is not the only one competing for the acquisition of control of Partner. Another contender is the foreign fund Apollo. Globes has learned that the person behind the initiative to bring in the fund to compete is Omri Cohen, the son of Amikam Cohen, former CEO and founder of Partner.
Omri Cohen / Photo: Sivan Farage
Cohen Jr. has been dividing his time in recent years between the West Coast in the United States and Israel, and he is the one who interested Apollo in buying Hutchison shares in Partner. The law holds shares and is acting in this matter against Hutchison Global.
The contacts have been going on for several months and the reason the deal did not progress at a faster pace lies mainly in Corona and the fact that Apollo’s representatives could not reach Israel. It is now clear that Apollo could lose the deal due to the organization of the Gabay-Arkin-Rodev group in an attempt to acquire Hutchison’s shares in Partner.
The local group has a distinct advantage due to being Israeli. For Hutchison, the ability to sell the shares quickly and smoothly is equivalent to money, which means that a quick approval of the deal from the Ministry of Communications and the Ministry of Defense may be welcome even if the return from Apollo is higher financially. It should be borne in mind that approval of such a heavy body in terms of the scope of its activities as Apollo, and its ownership structure, can take a long time and Hutchison will in that case have to decide whether to wait or take a much easier offer for approval.
We emphasize that Hutchison is not conducting a tender for the sale of its shares in Partner but is offering them for sale, so it can decide on a serious offer that will reach it without waiting for other offers.
Apollo is one of the largest private equity funds in the world. Its entry into the local communications market is mainly due to the fact that it sees Partner as an opportunity and against the background of its familiarity with the industry as part of its holdings in several communications companies.
Omri Cohen was previously an importer of cell phones when he imported and introduced the HTC brand, which has meanwhile faded. He currently represents companies in the field of virtual reality and deals with other financial projects abroad.
More than two years a partner without a core of control
For more than two years, since September 2019, the communications company Partner has been operating in practice as a company without a controlling interest. The businessman, the Israeli-American billionaire Haim Saban, then gave up his controlling shares in Partner, thus setting a loss of about half a billion shekels on his investment in the company. Saban offered the shares to Hutchison of Hong Kong, which previously controlled Partner.
Saban, who was previously part of the controlling interest in Bezeq Communications (along with Mori Arkin) and made a nice profit in it, returned to investing in the Israeli communications market when he acquired control of Ilan Ben-Dov in a deal completed in early 2013, after Ben-Dov controlled companies Collapsed.
As part of the deal, Saban “inherited” Ben-Dov’s debt to Hutchison – a shareholder loan previously granted to him to buy the company. Saban’s debt was due to be repaid in January 2020, and towards the due date he was in talks with Hutchison about refinancing the loan, but those contacts did not mature into an agreement. A situation arose in which Saban’s debt amounted to NIS 1.1 billion, while the market value of Partner’s shares (which are pledged to secure payment of the debt) amounted to only NIS 730 million. Subsequently, Saban shares (27%) were transferred to receivership prior to their transfer to Hutchison, subject to obtaining a control permit from the Ministry of Communications.
Several months later, Hutchison realized that the chances of obtaining a control permit were nil, due to the difficulty of granting a control permit to Chinese companies due to American opposition. Hutchison holds shares through a trustee appointed by the court and has no representation or influence on the board of directors. The American investment fund Apollo has been named as interested in the possibility of purchasing the shares from Hutchison.
Apart from the controlling shares in Partner, other shareholders in the company are institutional entities from Israel. The company is traded in Tel Aviv and NASDAQ, and unlike its competitor Cellcom, which was deleted from Wall Street trading a few months ago, Partner remained trading there as well.