* Cool offers 37 shekels/shr, 12.5 pct premium to avg price
* Offer reflects 2.695 bln shekel valuation for HOT
* HOT shares up 13.1 pct to 38.38 shekels
TEL AVIV, Aug 26 Cool Holding has offered to acquire the shares it does not already own in HOT Telecommunication Systems, one of Israel's largest telecom groups, at a 12.5 percent premium to the average price in the past month.
Cool, which is owned by French businessman Patrick Drahi, has offered HOT shareholders 37 shekels a share, reflecting a value for all of HOT of 2.695 billion shekels ($670 million), HOT said on Sunday. Cool owns 69.25 percent of HOT so it would pay nearly 830 million shekels for the remaining stake.
Shares in HOT, which had fallen 30 percent in 2012, were up 13.1 percent at 38.38 shekels at midday in Tel Aviv.
HOT is Israel's lone cable TV operator, with about 893,000 subscribers. It also provides mobile phone service as well as internet and local phone calling services.
The company said it received a proposal from Cool, in which Cool noted that the communications market in Israel has undergone great changes that has led to increased competition. New regulation has created uncertainty regarding competition in the short and medium term.
"Recent changes have greatly influenced investors' assessment of the sector and of HOT. We believe these changes present an opportunity for Cool, as well as risks that can be better dealt with in a private environment," HOT cited Cool as saying in its offer.
HOT competes directly with Bezeq, Israel's largest telecoms group, which dominates the local phone calling market and has units that offer satellite TV, internet and mobile phone services. In recent months, HOT has expanded its mobile phone unit and helped create a frenzy in Israel - and panic for larger mobile operators - with cut-throat rates.
Cool believes the deal can be completed within 30 days of receiving approval from HOT's shareholders, at which point HOT shares will be delisted from trade in Tel Aviv. Cool said it is acting to obtain financing for the deal.
(Reporting by Tova Cohen; Editing by Nick Macfie)