Oct. 23--Sources in Israel's telecommunications industry believe that Shaul Elovitch is close to completing a deal to buy control of Bezeq (TASE: BZEQ) from Ap-Sab-Ar Holdings Ltd. (the Apax Partners-Saban Capital Group Inc.-Arkin consortium), which owns a 30.7 percent stake in the company. The deal is worth some NIS 7 billion. According to information that has reached "Globes", Elovitch is at an advanced stage of negotiations to buy control of the telecommunications company after a period of discreet talks with Saban and Apax.

As previously reported in "Globes", Elovitch decided to go for Bezeq after failing in his bid for wireless carrier Partner Communications. The deal to buy Bezeq is however of a different order, and assuming that it takes place it will be the largest ever in the Israeli telecommunications market. It will change the face of the industry, because Elovitch will have to sell his holdings in 012 Smile and in satellite broadcaster Yes, causing an upheaval in the market because of the changes in ownership.

Bezeq has a market cap of NIS 21 billion, so that the controlling shareholders' stake is worth about NIS 7 billion, but the deal price has not been finally agreed, and it will depend on the market, and on whether the deal can obtain regulatory approval to go ahead at all. The deal is complicated by the fact that Bezeq is not allowed to raise its stake in Yes, but Elovitch owns 32 percent of Yes. In relation to 012 Smile, the question is whether it will be sold to Partner, which is interested in buying it. Elovitch also has holdings in satellite operations, but these are not likely to prove an obstacle to acquiring control of Bezeq.

The Saban-Apax-Arkin consortium is selling its stake in Bezeq after making a vast profit in four years. The consortium bought control of Bezeq for $932 million. Bezeq's share price has risen steeply this year.

No comment was available from Elovitch.

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Copyright (c) 2009, Globes, Tel Aviv, Israel

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