Apax Partners

Apax-Saban-Arkin Group to acquire controlling interest in leading Israeli telecom company Bezeq

The Apax-Saban-Arkin group has agreed to acquire a 30% controlling interest as well as an option to purchase an additional 10.7% interest. Upon completion of the transaction, the State of Israel will retain a 1% interest; Zeevi Communications Holding will continue to hold its 17.8%; and employees will own 4.7%.  The 35.9% stake currently held by public investors will continue to be available for trade on the Tel Aviv Stock Exchange (TASE). 

Bezeq enjoys strong competitive positioning across all of its businesses, including cellular, domestic fixed-line, multi-channel television, international long-distance, ISP, transmission and data and customer premises equipment and services.  In 2004, Bezeq generated 9.27 billion NIS/US $2.15 billion in revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) of 3.48 billion NIS/US $807 million.

Commenting on the acquisition, the Group said, “We are delighted and proud that our bid has been accepted, and thank the Government of Israel for their confidence.  This is a great privilege, but no less a great responsibility.  Bezeq is a strategic asset of the State of Israel, and we will continue to work with the Government and manage Bezeq from a broad national perspective.

“The successful conclusion of the Bezeq sale is a testament to the State of Israel, which conducted the auction at the highest professional international standard. The Minister of Finance, Binyamin Netanyahu, the Minister of Communications, Dalia Itzik, and the Director of the Government Companies Authority, Eyal Gabai, deserve high praise for their determination and professional oversight, which overcame all difficulties and turned the vision of Bezeq’s privatization into a reality.

“Additionally, the management of Bezeq deserves credit for its skill in Bezeq during a period of increasingly tough competition in a pre-privatization period characterized by uncertainty, as does the many professional, dedicated employees of the Company.  The Company’s achievements to date form an excellent starting point for its future development.

“A new chapter in the history of Bezeq is starting today and the Apax-Saban-Arkin Group intends to make the employees its partners in planning for the future.  Our vision is to move Bezeq forward. We will combine strong local capabilities of international know-how, telecom, management and media experience together with Saban Capital’s Group, Apax Partners and Mori Arkin.   We will maintain a continuous dialogue with the Israeli consumer, examining and analyzing its particular needs so that we can supply a full range of advanced services.”

“We are immensely proud to be a member of the group that today has won the bid for Bezeq.  Our Israeli office has already established itself as a leading venture investor, investing over US $200 million in Israel, so it is gratifying to see the business participate in one of the largest private equity buy-out deals ever done in Israel.

Our current acquisition of Bezeq further deepens the level of our involvement in the Israeli economy. We are committed to the Israeli market and will continue to actively invest there.

“After participating in the acquisition of a number of the world’s most important telecom and media companies, we believe that Bezeq is a high-quality acquisition and of great strategic importance to us. We will strive to improve Bezeq, just as we have succeeded in doing with the many international communications and media companies that we purchased, in which close cooperation with the employees has brought about impressive achievements for all.  Together with our partners, the Saban Group and Mori Arkin, we will strive to move Bezeq forward to a new era, for the benefit of the Israeli consumer, the employees, and the Israeli economy.”

“The acquisition of Bezeq is monumental in two ways -- it represents the transition of an important asset from State ownership and is one of the largest investments in an Israeli corporation in recent years.  Bezeq is an attractive company, with strong cash flow and great competitive positioning.  I believe that the combination of local talent and the Group’s strategic capabilities will propel Bezeq to the forefront of technology and customer service. 

“The Israeli telecom and media market is among the most vibrant and dynamic that I have encountered anywhere in the world.  I plan to be actively involved in the future development of Bezeq and to work with management to ensure that the Israeli consumer will benefit from a line of new, advanced services at attractive prices.”

“I am proud to be part of a global group that has taken upon itself the responsibility for the management and development of Bezeq. I entered the communications market out of interest and recognition of its high potential for growth.

“As an Israeli and now as partner in the Company, I appreciate Bezeq’s achievements in all aspects of the communications field. I am excited by the challenge of playing a part in its development as an efficient and advanced Company in terms of infrastructure, customer services, and attractive prices.”

-ENDS-

EDITORS’ NOTES

Bezeq is Israel’s national telecommunications provider. Established in 1984, the Company has led Israel into the new era of communications based on the most advanced technologies and services. Bezeq and its subsidiaries offer a comprehensive range of services including local, long distance and international telephone services, cellular communications, Internet and other data communications, satellite services, leased lines and corporate networks. Bezeq’s shares are traded on the Tel Aviv Stock Exchange under the symbol BEZQ.  This bulletin and prior bulletins are available on Bezeq’s website at www.bezeq.co.il.

Saban Capital Group, Inc. ("SCG") is a private investment management firm specializing in the media and entertainment industries.  Based in Los Angeles, SCG was established in 2001 by Haim Saban, founder of global family entertainment company Fox Family Worldwide, and Saban Entertainment, an international television, production, distribution and merchandising company.   The firm makes both controlling and minority investments in public and private companies, and adds strategic value through its established relationships and industry experience.   In addition, SCG owns and operates music-publishing assets, and maintains extensive philanthropic interests.

Apax Partners is one of the world’s leading private equity investment groups, operating across the United States, Europe and Israel. Apax Partners has raised or advised approximately $20 billion around the world. With more than 30 years of direct investing experience, Apax Partners’ Funds provide long-term equity financing to build and strengthen world-class companies. It pursues a multi-stage equity investment strategy, investing in late venture, growth capital and buyouts. Apax Partners’ Funds invest in companies across its 6 chosen global sectors of telecommunications, IT, retail and consumer, media, healthcare and financial/business services. www.apax.com

For further information, please contact:

Saban Capital Group:

Stephanie Pillersdorf/ Alex Eule (US)

Tel: +1 212 687 8080

Email: sp@sardverb.com

Apax Partners:

Tamar Levine (Israel)

Tel: +972 9 9608 127

Cell: +972 54 4851 517

Email: tamar.levine@apax.com

Hagai Schwartz

Tel: +972 3 5765 789

Cell: +972 54 8300 376