TPG negotiating for 16% of Partner

Parent company Scailex kicks off sale of its holdings in cellular provider. Aside from US investment fund, which has previously acquired 25% of Strauss Coffee's activity in 2008, two other funds holding talks with controlling shareholder Ilan Ben-Dov

Reuters | Published: 12.26.11, 13:51

US investment fund Texas Pacific Group (TPG) is negotiating over an investment in leading cellular provider Partner Communications.

Calcalist has learned that a representative from TPG recently contacted the company's controlling shareholder, Ilan Ben-Dov, and that both parties discussed the fund's acquisition of a stake in the company.

Another option discussed was the acquisition of a stake in Scailex by directly investing in Partner along with the acquisition of the company's stock from Ben-Dov.

Aside from TPG, two other funds are mulling an investment in Partner Communications through contacts and investment banks. Negotiations are over the acquisition of a 16% stake in the company.

TPG was founded in1992 and manages some $50 billion to date. The fund conducts activity in 40 countries and in 2008 acquired 25% of Strauss Coffee's activity for $293 million.

The fund invests mainly in media and communications, consumer products, finances, industry, entertainment and technology services.

Cash crunch tips the scales

Two months ago, Ben-Dov and his managers were still denying that Scailex is negotiating for a new strategic partner for Partner. On Sunday evening, however, Scailex announced that "the company's board decided to commission First International Bank to manage the sale of the Partner stock."

The announcement came only two days after the company announced it was negotiating over the sale of a 50% stake in its Samsung cellular activity to Teddy Sagi for NIS 300 million (about $80 million). The negotiations fell through the next day.

Scailex holds 44.5% of Partner Communications, of which 16% is non-restricted stock, all or part of which Partner will attempt to sell at a higher value than its market price.

The value of all of the non-restricted stock as of Monday was about NIS 860 million ($228 million), and estimates are that Ben-Dov will try to dump them for twice that value.

"The purpose of the sale is to shore up the company's capital structure. The board's decision was made also upon request from various parties and later on, in response to demand on part of global telecom investment funds," the company statement said.

The statement alludes mainly to the deal that was published over the weekend, during which Partner sold the ownership (100%) of its Swiss cellular provider to Apax Fund for NIS 2.1 billion ($560 million), reflecting a 6.5 value of Orange Switzerland's 2011 EBITDA.