U.S. hedge fund giant considering to buy Israeli utility Bezeq

JULY 5, 2018 20:49

Updated: JULY 6, 2018 18:35

The logo of Bezeq Israeli Telecommunication Corp Ltd, the country's largest telecom group, is seen outside their headquarters in Tel Aviv, Israel June 21, 2017.

(photo credit: REUTERS/AMIR COHEN)

“It’s a new and serious player – the largest actor yet – to make a bid for Bezeq,” said the market source.

Highland Capital Partners – a $14 billion US private equity firm – is looking to purchase Israeli telecom utility Bezeq’s controlled shares, according to market sources, who first leaked the news to The Jerusalem Post.

Based in Dallas, Texas, the giant hedge fund would be buying up roughly 26% of Bezeq’s shares, worth an estimated NIS 1.2 billion – all of which are owned by controlling shareholder Shaul Elovitch.

If everything goes well – on the regulatory end, legal side and regarding the soundness of Bezeq’s balance sheet – Highland Capital could make a formal offer in a matter of weeks, said a source who is closely acquainted with the negotiations.

“It’s a new and serious player – the largest actor yet – to make a bid for Bezeq,” said the market source.

The move would buy out Elovitch’s stakes – who is currently under criminal investigation. Elovitch is accused of offering to promote positive coverage of Prime Minister Benjamin Netanyahu on his news portal Walla in exchange for regulatory benefits.

Elovitch allegedly intervened in the 2015 merger of Bezeq and satellite TV unit YES.

This case has been dubbed “Case 4000,” one in a series of police probes plaguing Netanyahu. Elovitch is a family friend of Netanyahu’s, and since the fallout emerged, he has distanced himself from Bezeq’s daily operations.

Bezeq is owned Internet Gold, and it’s up to the board of directors to agree to sell Elovitch’s shares.

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Other possible buyers for Bezeq include American philanthropist and World Jewish Congress president Ron Lauder, along with rumored interest from the Neuman brothers and diamond dealer Naty Saidoff.

Israeli venture firm Silver Road Capital is helping to connect Highland Capital with Bezeq. The firm is comprised of three partners – former ambassador to the US Danny Ayalon, Steve Lavin and Lior Maimon.

When Silver Road Capital was asked for more detail on the pending acquisition, its chairman demurred.

“This is good news for Bezeq, for Bezeq shareholders, employees and it’s also good news for the Israeli economy,” Ayalon told the Post.

Highland Capital is also looking at investing in a number of other Israeli businesses, specifically hi-tech start-ups.

“They are here to stay. They are looking at other businesses here, through Silver Road Capital,” Ayalon added.

Bezeq has gone through a recent tumult, with the arrest of its former CEO Stella Handler in conjunction with Netanyahu- related police probes.

Last month, the utility announced that its new CEO, Dudu v, would take charge on September 1.