In a race to beat a counterbid by Bezeq and wind up a deal before Hot Telecom buys Partner Communications, Cellcom Israel said Tuesday it had signed an agreement to buy its smaller cellular rival Golan Telecom for 590 million shekels ($173 million).
As part of the deal, Cellcom will reportedly forgive 130 million shekels ($38 million) of debt Golan owes it for use of its network. Cellcom said it would pay for Golan in two installments – 413 million shekels on completion of the transaction and 177 million shekels up to three years later.
The binding memorandum of understanding comes less than two days after Bezeq’s Pelephone unit bid to buy Golan for 710 million shekels. One source said the board of Electra Consumer, the company selling Golan, justified Cellcom’s lower offer because it includes debt forgiveness.
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Three weeks ago, Hot’s European parent company, Altice, made an offer for Partner for an unspecified price amid signs of consolidation in Israel’s struggling cellular telephony industry. Since it’s unlikely regulators will approve two mergers, it appears Cellcom sought to be the first to reach a deal.
But Electra Consumer’s board will not only have to explain why it accepted a lower bid but why it did so after a negotiating period of just two days after it confirmed it was in talks.