Altice drops $980m bid to buy Israel’s Partner Communication

Altice drops $980m bid to buy Israel’s Partner Communications

02 April 2020 | Alan Burkitt-Gray

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Altice Europe has dropped plans to for its existing Israeli operation, Hot Telecommunications, to buy rival operator Partner Communications for US$980 million.

Dexter Goei (pictured), president of Altice Europe and CEO of Altice USA, told Partner the news in a late-night phone call.

Goei advised Partner “that Altice cannot continue with the negotiations, and it is therefore terminating all further discussions”, in an ill-tempered announcement about the negotiations.

The merger would have created an operator with a 40% share of the Israeli market.

From Partner’s account, relationships began to deteriorate in mid-March, when it tried to extract commitments from Altice that the deal, first proposed in late January, was still going ahead.

Partner said: “In order to verify the ability of Altice to consummate the transaction, the board asked to receive from Altice the commitment letter of the financing bank of Altice containing such bank’s undertaking to finance the transaction.”

No letter had been received by Saturday, and the Partner board offered a further deadline, this week.

“In addition, the board reiterated some of the major open issues that required resolution, namely the certainty of payment of a termination fee by Altice and Hot if the transaction were derailed and the guarantee of Hot’s obligations by entities in the Altice group.”

The result, says Partner, was a phone call from Goei: “The reasons mentioned by Altice were the rapidly deteriorating economic situation and bleak prospects for a short recovery.”

Altice told Partner that there were still “many issues … that have not been agreed upon yet.”

Altice issued a short statement saying: “Altice Europe confirms that its fully owned subsidiary Hot has terminated discussions regarding the potential acquisition of Partner Communications.”

Tel Aviv-based newspaper Haaretz offered “differing explanations for the decision”, saying its sources said “it was unrelated to the epidemic” and more likely “due to doubts that the deal would ever get regulatory approval”.

This is unlikely to be the end of it. The Israeli market is under severe pressure and is reacting to the position by planning consolidation. In February Cellcom Israel bid to buy Golan Telecom, for only half what it offered in an abortive attempt five years ago.

Partner Communications was originally called Orange Israel, under a licensing deal that was transferred from the Orange group’s first owners in the 1990s, Hutchison of Hong Kong, to the former France Telecom, which now uses the Orange brand worldwide.