Hutchison Whampoa Ltd. (13), billionaire Li Ka-shing’s biggest company, is reentering Israel’s phone industry after less than three years by agreeing to buy a stake in Partner Communications Co. (PTNR)’s largest shareholder.
Hutchison and the Li Ka-Shing Foundation will pay $125 million for 75 percent of Scailex Corp. (SCIX) from Suny Electronic Ltd., the Hong Kong-based company said today. Scailex owns a 44.5 percent stake in Partner, Israel’s second-largest mobile-phone operator. Scailex rose 28 percent at the 4:30 p.m. close in Tel Aviv. Hutchison fell 0.9 percent to HK$61.90 at the close in Hong Kong.
Hutchison exited the Israeli phone market in 2009 when its telecommunications unit sold a 51 percent stake in Partner to Scailex for $1.4 billion. Partner’s shares have slumped 65 percent in the past year as the government stepped up efforts to boost competition in the mobile phone market.
“This is not a cheap buy,” Dan Eldar, a representative of Hutchison based in Israel, said on a conference call from Hong Kong. “Partner is a good company” and it’s premature to talk about business strategies for the telecom company, he said.
Suny will retain a 3.6 percent stake in Scailex and Ilan Ben Dov, who controls Suny, will own 3.7 percent after the deal.
Shares of Suny more than doubled to 7.32 shekels in Tel Aviv. Partner added 3 percent to 19.41 shekels.
Suny will acquire the import and marketing operations of Samsung cellular products from Scailex for $100 million, Suny said in a statement. A loan agreement signed as part of the August 2009 accord would also be restructured, it said. The completion of the deal is subject to regulatory and other approvals and Scailex buying back at least 50 percent of its bonds, Hutchison said.
Hutchison plans to appoint Amikam Cohen, the former chief executive officer at Partner, as chairman of Partner’s board if the deal goes through.
Li controls more than 50 percent of Hutchison Whampoa’s stock, through his Cheung Kong Holdings Ltd. (1), and personal stock holdings. Hutchison has investments in industries spanning ports, retail, telecommunications, energy and property in more than 50 countries.
Hutchison is assuming Scailex’s debt, Eldar said on the call. Of Scailex’s total debt of $760 million, $300 million is owed to Hutchison and the remainder to third parties, according to Hutchison.
Hutchison Telecommunications International Ltd., a unit of Hutchison Whampoa, booked a one-time gain of HK$6.33 billion ($816 million) when it previously sold its stake in Partner, according to a March 2010 Hong Kong stock exchange filing.