Hutchison nears deal to buy back control of Partner

TEL AVIV Mon Jun 4, 2012 3:32am EDT

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TEL AVIV (Reuters) - A deal for Hutchison Whampoa (0013.HK) of Hong Kong to acquire control of Scailex (SCIX.TA), the parent of Israeli mobile phone operator Partner Communications (PTNR.TA), is expected to be signed within hours, Scailex said on Monday.

"The company clarifies that negotiations are advanced and the company estimates an agreement will be signed in the coming hours," Scailex said in a statement to the Tel Aviv Stock Exchange.

"Until the start of trade tomorrow morning the company will report whether or not a deal has been signed."

Scailex's parent company Suny Electronic Inc (SUNY.TA) had said on Sunday that talks were taking place.

Hutchison sold a controlling stake in Partner (PTNR.O), Israel's second-largest mobile phone operator, to Scailex for $1.38 billion, or $17.50 a share, in 2009. That is well above Partner's closing price of $4.49 on Nasdaq on Friday.

The purchase price included $1.08 billion in cash and a secured debt instrument of $300 million.

Scailex had expected to finance the loan with dividend payments from Partner. But Partner, which has seen its profit fall sharply, last paid a dividend in the third quarter of 2011.

Shares in Partner were up 2.4 percent to 18.22 shekels in morning trade in Tel Aviv.

Partner, which operates under the Orange brand name, and its rivals have come under pressure in the past year from increased competition and regulatory changes.

The government forced mobile operators to slash fees they charge each other to connect calls and to scrap exit fines for customers. The government also issued new licenses to create more competition and push prices down in a market dominated for more than 12 years by three groups.

Debt-laden Scailex is the sole importer of Samsung mobile handsets in Israel. Suny said it would acquire Scailex's import activities for Samsung phones in parallel to Hutchinson buying control of Scailex.

Scailex holds 44.54 percent of Partner's shares, worth 1.2 billion shekels ($308 million). Scailex and Suny are controlled by Israeli businessman Ilan Ben-Dov.

($1 = 3.9 shekels)

(Reporting by Tova Cohen; Editing by Jon Loades-Carter)

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