The IPO of Cellcom Israel Ltd., likely to be the largest IPO by an Israeli company on a foreign exchange this year, is drawing nearer on the New York Stock Exchange. IDB Holding Corp. Ltd. (TASE:IDBH) subsidiary Discount Investment Corporation (TASE: DISI) today published the prospectus for Cellcom, which states that the company will be floated at a value of $1.6-1.8 billion at $16-18 per share. About 19 million shares will be sold in an offer for sale, and the underwriters have an option to buy an additional 2.85 million shares.
Discount Investment will sell 18 million Cellcom shares, reducing its holding in the company from 78.5% to 60.5%. If the underwriters exercise their green shoe option, Discount Investment’s holding will fall to 58%. Discount Investment said that if Cellcom’s IPO goes as planned at the expected price, it will make $288-373 million and report a net capital gain of NIS 355-575 million.
The bookrunners for the IPO are Goldman Sachs & Co. (NYSE:GS), Deutsche Bank Securities Inc. and Citigroup Inc. (NYSE:CE). Merrill Lynch & Co. (NYSE:MER) is the joint lead manager, and Jeffries & Company and William Blair & Company are secondary underwriters. Jeffries is a partner of Bank Leumi (TASE: LUMI) and William Blair is represented in Israel by Poalim Capital Markets - Investment Bank Ltd..
IDB has made some quite complicated financial deals on Cellcom, beginning with a NIS 1.9 billion bond issue, obtaining a $550 million credit line from, which strengthened its position to be a joint bookrunner for the IPO, obtaining a $600 million loan from Bank Leumi to finance the acquisition, and the distribution of a huge dividend. None of this will be completed until a successful IPO by Cellcom to create a real upside on the acquisition, and it will be the IDB chairman and CEO Nochi Dankner’s ultimate test in the Cellcom deal.
Discount Investment promised its new partners in Cellcom, when they acquired minority stakes in the company, that it would be floated within three years. If the IPO goes ahead during the first half of 2007, it will be held only a year after the promise was made.
Discount Investment acquired 94.5% Cellcom from BellSouth and the Safra group in 2006. It subsequently sold 14% of the company: 5% to Goldman Sachs, 4% to Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), and 5% to Bank Leumi. The sales were made at a company value of $2.07 billion for Cellcom, and a value of $1.44 billion, excluding dividends.
Published by Globes [online], Israel business news - www.globes.co.il - on January 18, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007