Patrick Drahi has once again increased his offer for the remaining stake in HOT Telecommunication Systems to NIS 41 (US$10.6), according to an announcement issued to the Tel Aviv stock exchange today.
French businessman Drahi already owns 69.25% of the…
Patrick Drahi has once again increased his offer for the remaining stake in HOT Telecommunication Systems to NIS 41 (US$10.6), according to an announcement issued to the Tel Aviv stock exchange today.
French businessman Drahi already owns 69.25% of the Israeli telco through Cool Holding and as TelecomFinance previously reported, raised his offer from NIS 37 (US$9.6) to NIS 38 (US$9.8) last month.
HOT shares rose 4.88% in today’s trade giving it a market cap of NIS2.8bn (US$0.695bn).
The HOT general shareholders meeting is scheduled for 4 November to make a decision on the offer, although Eran Jacoby, analyst at DS Brokerage, told TelecomFinance the board has asked to postpone the meeting until 6 November.
Analysts disagree on whether Drahi should have raised his offer. “I don’t know why he raised the price, he could have got enough shares at NIS 38,” Jacoby said.
However, David Kaplan, analyst at Barclays Capital, said he was unsurprised by the new offer. “We said at the time that NIS 37 wouldn’t be enough,” he told TelecomFinance. “NIS 41 is a fair offer. I think Drahi has a good sense of what equity holders would want and he needs 95% of the shares.”
The attempted HOT acquisition has been fraught with problems. Cool Holdings’ bondholders, led by Mizrahi bank, recently tried to block the purchase as the HOT shares will be used as collateral for Cool’s debt and will result in the telco being de-listed.
It was agreed that bondholders will be compensated NIS 55m (US$14.2m) if the company is privatised and the dispute was settled a few days ago.
“I understand why Drahi wants to take HOT private,” Jacoby said. “It’s going through a tough period and no-one knows what will happen with multi-channel regulations and the Israeli elections coming up.”
However, an analyst who preferred not to be named said he thought Drahi should keep HOT public and do more equity deals to finance future investments. “I don’t understand what Drahi gains by taking the company private,” he said. “It seems that he is going to de-list it and then leverage it more.”