Shamrock Holdings will be allowed to bid for the controlling stake in the state-run phone company Bezeq, a top-level Israeli panel decided yesterday.

Shamrock has teamed up with media mogul Haim Saban to bid for the Bezeq, which has a monopoly in the domestic communications market.

The decision to allow the Shamrock-Saban group to contend for Bezeq was made by a panel headed by the prime minister's director-general, attorney Dov Weisglass.

Six groups are now contending for the controlling 50.01% stake in Bezeq. A seventh group, including Africa Israel, has withdrawn from the race.

The Communications Ministry, the Government Companies Authority and the Finance Ministry all support allowing Shamrock-Saban to bid.

The hurdle to allowing Shamrock's bid has been its 50% holding in Bezeq subsidiary Pele-Phone Communications. State officials have feared that inside information obtained by virtue of the Pele-Phone holding would bring the Disney company an unfair advantage, against the other bidders. Shamrock had even provided the state with a letter undertaking not to try to buy Bezeq. The state has since agreed that the commitment shall be null and void.

State officials will be meeting with Shamrock representatives within a few days, to discuss negating any unfair advantage it might have.

One possibility is that Bezeq buy out Shamrock's holding, a move the phone company has avoided. Fully owning Pele-Phone would make the cellular operator a government company too.

A possible mechanism to avoid that outcome would be for a trustee to hold the Pele-Phone shares until Bezeq's full privatization.

Saban was the one who initiated contact with Shamrock earlier this year, suggesting they team up to contend for Bezeq.

Local industry sources are sour about the looming Shamrock-Saban deal. one source complained that the only reason Shamrock won the 50% stake in Pele-Phone, bought from Motorola, was its commitment not to bid for Bezeq. Without that commitment, the source groused, the Israel Corporation would have won the deal. There are also rumbles about lawsuits over allowing Shamrock to throw out its commitment.

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