Bellsouth, Safras in talks to sell Cellcom stakes at $1.3b company value

With Reuters

Bellsouth (NYSE:BLS) and the Safra banking brothers are negotiating to sell their stakes in Cellcom according to a company value of $1.3 billion, a banking source confirmed to TheMarker today.

Ma'ariv broke the story of the talks today, saying Bellsouth and the Safras want $800 million-$900 million cash. Ma'ariv wrote that the two key shareholders are negotiating with a European company that is discussing financing with Israeli banks.

But another Cellcom shareholder denied today that the Safras are negotiating to sell their Cellcom shares.

Bellsouth owns 37.8% of Cellcom, and Brazil's Safra banking group has another 34.8%. The two companies hold their Cellcom stakes through a joint company. Discount Investment Corp holds 25% stake of Cellcom, Israel's second biggest cellular operator.

The reported $1.3 billion valuation is roughly 40% below an assessment dating from last year. Accountant Yitzhak Suary evaluated the company in July 2001, though his report was only made public in December, at NIS 7.6 billion to NIS 10.5 billion.

Another assessment, by Bank Hapoalim dating from January this year, set Cellcom's value at $2.4 billion, at the time more than NIS 10 billion.

Bellsouth has already announced its plan to liquidate its European and Israeli holdings. Media reports have previously said the Safras would take over Bellsouth's Cellcom holdings, in exchange for their share in Brazilian operator BCP. However, now Safra wants to offload its stake as well, Ma'ariv said.

Sources near Cellcom say the Safras offered to buy out Bellsouth's part in August 2001 according to a company value of $1.5 billion, but Bellsouth held out for a billion more.

A month ago, commenting on reported quarrels between Bellsouth and the Safras on Cellcom's management, Israeli Communications Minister Reuven Rivlin claimed that Bellsouth was not exiting its investment in Israel.

The main pain from the lower valuation would be felt by the shareholders and the company workers holding options.

Cellcom, the largest of Israel's four mobile phone operators, posted a 28% rise in net income in the first quarter of 2002 of NIS 175 million on slightly higher revenues as efficiency measures and currency hedging paid off.

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