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Partner Slips on Report Hutchison Won’t Return: Israel Overnight

Hutchison Whampoa Ltd. Chairman Li Ka-shing
Li Ka-shing, chairman of Hutchison Whampoa Ltd. and Cheung Kong Holdings Ltd. Photographer: Jerome Favre/Bloombekrg

March 20 (Bloomberg) -- Partner Communications Co. halted its best rally in six weeks as a report that former shareholder Hutchison Whampoa Ltd. won’t reinvest boosted concern the Israeli mobile-phone company’s stock will extend declines.

American depositary receipts of Partner dropped for the first time in five days yesterday, ending their longest run of gains in New York since the end of January. The Rosh Ha’Ayin, Israel-based company had the second-biggest drop of eight decliners on the Bloomberg Israel-US Index of the largest New York-traded Israeli companies, which was little changed at 87.81. The shares gained 2.4 percent at the close in Tel Aviv. Tower Semiconductor Ltd. rose after announcing a pact with the Swiss Center for Electronics and Microtechnology.

Partner posted its biggest advance since the start of February last week on speculation Hutchison, controlled by Hong Kong billionaire Li Ka-Shing, will buy shares in Israel’s second-largest mobile-phone company, according to IBI-Israel Brokerage & Investments Ltd. The Chinese company doesn’t intend to regain part of the 51 percent stake it sold in August 2009 to Scailex Corp., Globes newspaper reported on March 18, citing Hutchison representatives that it didn’t identify in Israel.

“Hutchison coming into the market is good news for the company because under its holding Partner was flourishing,” Ori Licht, the head of research at IBI said by phone from Tel Aviv yesterday. “There were expectations that Hutchison may buy the stake from Scailex for a higher price. But now there are rumors it’s not going to happen.”

Shares Halved

Shares of Partner have more than halved to $7.41 from $17.79 in New York when Scailex bought the stake from Hutchison, as the government stepped up efforts to boost competition in the mobile market and as concern increased about growing debt at controlling shareholder Ilan Ben Dov’s investment company Tao Tsuot Ltd.

The Tel Aviv-based shares of Partner gained to 28.78 shekels today, or the equivalent of $7.68. Israel’s benchmark TA-25 Index declined 0.2 percent.

Hans Leung, a spokesman for Hutchison, declined to comment in an e-mail. A Scailex spokeswoman declined to comment. Partner declined to comment on the report today.

Ben Dov, who has a 44.5 percent holding in Scailex through his 82 percent stake in Sunny Electronic Inc., said on Feb. 2 that he’s considering a deal in which Partner would become closely held. Scailex said on Dec. 26 that it plans to sell part of its Partner stake.

Hutchison, which invests in ports, telecommunications ventures, retail, property and energy producers in more than 50 countries, is Li’s biggest company by revenue.

‘Big Group’

Li is 13th on the Bloomberg Billionaires Index with a net worth of $25.5 billion. He opened a plastic flower factory in the wake of World War II and began focusing on Hong Kong real estate in 1967 after riots during China’s Cultural Revolution depressed prices.

“Hutchison is a big group that doesn’t seem to have the same problems that Partner’s biggest shareholder has,” said IBI’s Licht, who has a neutral rating on Partner shares.

Partner postponed on Feb. 22 its earnings results until the end of the month and forecast a drop in fourth-quarter profit. The company didn’t issue dividends in the second quarter.

Israel, whose population of 7.8 million is similar in size to Switzerland’s, has about 60 companies traded on the Nasdaq Stock Market, the most of any country outside the U.S. after China. The nation is also home to more startup companies per capita than the U.S.

Tower climbed 3.5 percent to 2.97 shekels in Tel Aviv today, or the equivalent of 79 cents, after rising 6.8 percent to 78 cents yesterday in New York. The Migdal Haemek, Israel-based chipmaker will cooperate with the Swiss center on European design center projects, according to a statement yesterday.

Ituran Location and Control Ltd., a maker of systems for locating stolen vehicles based in Azur, Israel, dropped 2.7 percent to 51.21 shekels, or the equivalent of $13.67, after sliding 3 percent to $13.86 in the U.S. yesterday.

To contact the reporters on this story: Tal Barak Harif in New York at tbarak@bloomberg.net;

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net

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