Bezeq deal to be signed within 48 hours

If there are no last-minute changes, the official announcement of the sale of Bezeq to Shaul Elovitch will come in the next 48 hours and control of Israel's largest telecom firm will change hands for about NIS 7 billion.

Ap-Sab-Ar Holdings, the official name of the Apax-Saban-Arkin group comprising the Apax Partners private investment fund, Haim Saban and Moshe (Mori) Arkin that owns the 30.7% controlling share of Bezeq, will be walking away with a 300% return on their investment in only four years - and a profit of NIS 5 billion.

The negotiations, which started last Wednesday evening, continued over the weekend in the hope of signing the deal today. No statement has been released to the Tel Aviv Stock Exchange on the matter, and all sides are keeping strictly silent in the media.

The final price and structure of the deal is still unknown, but it is assumed Elovitch will pay a small ownership premium, a few percent more than Bezeq's present share price on the TASE, which was NIS 8.6 per share when the market closed last Thursday.

The original plan was to negotiate very quickly, and completely in secret to prevent any leaks - and only to make the surprise announcement at the beginning of this week once everything was closed, but TheMarker's surprise exclusive on Friday revealing the deal changed those plans. Bezeq's management knew nothing of the negotiations with Elovitch, which were conducted over their heads by the owners. Bezeq board chairman Shlomo Rodav was in on the secret.

Elovitch's Eurocom Group is expected to make the purchase via its Internet Gold holding company, which is also the owner of Internet service provider and overseas long-distance operator 012 Smile. Eurocom is privately held, but Internet Gold is traded on the TASE and could be used as a vehicle to raise funds from the public.

It seems that even the banks, which will be financing Elovitch's purchase, were not informed of the negotiations. Instead, Elovitch is basing the financing on a preliminary agreement with the banks similar to the previous financing deal he arranged for his failed bid for Partner. However, Elovitch will have to find about NIS 2.5 billion of this sum from his own sources of capital.

Industry sources expect Bank Hapoalim to lead the financing agreement for Elovitch, though institutional investors told TheMarker that since there are no details available yet, it is hard to determine who else will participate in the financing. Elovitch will have to come up with the NIS 7 billion, the vast majority of which is expected to come from local banks. Though it is possible that JP Morgan Chase, which is advising on the negotiations, could provide interim financing. Elovitch is not expected to issue bonds to raise money for the purchase.

Elovitch is expected to have a number of financial partners, said sources close to the deal. But he will not bring in a strategic partner and not share the leadership of the company.

If Bank Hapoalim does lead the financing group, it may very well ask to buy a share of the company, as Bank Leumi did when it financed the recent acquisition of cellular operator Partner - but nothing in the Bezeq financing deal has yet to be finalized.

Another institutional investor interested in financing part of the deal is Amitim, the organization that incorporates eight veteran pension funds, managed by Yael Andorn. Amitim was one of the investors interested in financing Elovitch's bid for Partner.

Migdal Insurance is another name mentioned.

Bank Hapoalim made no comment on the matter.