Israeli Businessman Naty Saidoff to Buy Eurocom

Update: Sunday night, an agreement in principle has been made between Israeli businessman Shaul Elovitch, the controlling shareholder of Eurocom, and Israel-born real estate developer and businessman Naty Saidoff, which will see the company sold in its entirety to Mr. Saidoff for $100-115 million.

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Eurocom is the controlling stakeholder of Israel’s biggest telecommunication provider Bezeq The Israeli Telecommunication Corp Ltd., through two other holding companies.

Mr. Elovitch and Eurocom are currently carrying a debt of $430 million, and so the deal is dependent on the approval of Eurocom's biggest creditors, Israel's three largest banks, Bank Hapoalim, Bank Leumi and Israel Discount Bank Ltd. As of last night, Hapoalim approved the deal.

The agreement will also include a write-off of some of Eurocom’s debt to the banks.

On Wednesday, the three banks submitted a complaint to an Israeli court, asking for the liquidation of Eurocom due to its debts. The discussion is set for 11:30 a.m. Monday, but it remains to be seen whether the recent agreement will see the complaint drawn.

Private equity group TPG Capital has expressed interest in acquiring Eurocom, the controlling stakeholder of Israel’s biggest telecommunication provider Bezeq The Israeli Telecommunication Corp Ltd., according to two people familiar with the matter who spoke on conditions of anonymity.

Bezeq's ownership structure means buyers will be able to acquire the controlling stake for $115 million (NIS 400 million), but the convoluted scheme might ward off prospective buyers.  

The current controlling shareholder, Israeli businessman Shaul Elovitch, controls Bezeq through three holding companies. At the top is private holding company Eurocom Group, owned jointly by Mr. Elovitch and his brother. Eurocom owns a 61% stake in Israel-based communication company Internet Gold Golden Lines Ltd., which owns a 65% stake in B Communications (BCOM) Ltd. BCOM is a holding company with a single asset, a 26% stake in Bezeq.

Mr. Elovitch and Eurocom are currently carrying a debt of $430 million. Mr. Elovitch might also be facing charges after an investigation uncovered various securities violations performed during Mr. Elovitch's acquisition of Israeli satellite television broadcaster D.B.S. Satellite Services Ltd., also known as Yes, in 2015.

Another potential obstacle for the deal is a government directive requiring that Bezeq’s controlling shareholder be a citizen and resident of Israel or have a partner that is, since Bezeq's services are considered an essential infrastructure under Israeli law.

In all likelihood, TGP has already received some prospective material, the people familiar with the matter said, adding that another major international fund has also expressed interest.

Three Israeli funds have also expressed some interest, people familiar with the matter who spoke on conditions of anonymity said, though at this point it's not certain they will follow through on that interest.

Established in 1992 and dually-headquartered in San Francisco and Fort Worth, Texas, TPG has over $73 billion in assets under management. In 2008, TPG bought a 25.1% stake in the coffee business of Israel-based Strauss Group for $293 million, but agreed to sell it back in March for $279 million (€257 million).

TPG has yet to respond to a request for comment.