Discount Investment Corporation (TASE: DISI) said this morning that it is looking to sell 5% of its shares in mobile carrier Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL). Discount Investment also reported that it is considering stopping consolidated reporting with Cellcom.
IDB Holding Corp. Ltd. (TASE:IDBH) unit Discount Investment holds 51.7% of Cellcom's shares, and these holdings are currently worth $1.5 billion. Cellcom has lost 11.1% of its value since the start of April, and its market cap is currently $2.8 billion.
Nochi Dankner, who controls IDB, seemingly wants a foreign buyer for the 5% holding in Cellcom. "Bloomberg" reports that Deutsche Bank is distributing 3.26 million shares at a 3.6% discount on this morning's opening price.
Cellcom is in the process of merging with sister company in the IDB Group NetVision Ltd. (TASE: NTSN), which is an Internet service provider and landline operator. At the same time, Cellcom's competitor Partner Communications Ltd. (Nasdaq: PTNR; TASE: PTNR) is merging with Netvision's rival 012 Smile Telecom Ltd..
Cellcom is expected to pay NIS 1.54 billion for the acquisition of NetVision, and when the deal is completed, Discount Investment will record a capital gain of NIS 71 million, while Clal Industries and Investments Ltd. (TASE: CII), which is also part of the IDB Group will record a capital gain of NIS 87 million.
In the first quarter of 2011, Cellcom saw its revenue impacted by the government's reduction of inter-connectivity fees. Cellcom recorded revenue of NIS 1.59 billion in the first quarter of 2011, similar to the corresponding quarter of 2010. Net profit fell 2.5% from the corresponding quarter to NIS 306 million.
Cellcom's share price fell 1.3% on the NYSE yesterday to $28.18, giving a market cap of $2.79 billion. Earlier yesterday, the share price had fallen 1.1% on the TASE.
Published by Globes, Israel business news - www.globes-online.com - on June 28, 2011
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