Israel Gitam Advertising Suing Ronald Cohen Apax For $4.88 Million

By Israel News Agency Staff

Tel Aviv ----- June 16......The Gitam advertising and public relations agency in Israel launched a multi-million dollar lawsuit in Tel Aviv District Court against international investment fund Apax Partners. Gitam advertising and public relations is suing Apax Partners for NIS 28 million, equivalent to $4.88 million. In its suit Gitam, which is owned and run by Moshe Theumim, claims that Apax breached its undertaking to compensate it appropriately for its professional services during the August 2004 tender for the government's controlling interest in Bezeq (TASE: BZEQ).

Several local and international groups participated in the Israel government tender and retained leading attorneys, accountants and and strategic advisors to increase their ability to secure the tender. The Israel state offered 30 percent of Bezeq's stock. Gitam claims that Apax wanted to participate in the tender. Via its local manager at the time, Hanoch (Allan) Barkat, it contacted Gitam for advisory services. The lawsuit relates to the contacts between Apax Partners, registered in England and leading telecommunications group Gitam, which includes Gitam BBDO and public relations firm Gitam Porter Novelli.

Not only did Gitam Advertising agree to advise Apax, but it also agreed to waive any fee unless Apax actually won the billion-dollar tender. Which it did.

Apax Partners is one of the world's leading private equity investment groups, operating across the US, Europe, Israel and Asia. Apax states that it's "mission is to create wealth for the investors who have entrusted us with their capital by investing actively in companies." Apax has raised approximately $20 billion around the world for its clients. Apax Partners’ Funds provide long-term financing to global companies. Apax works with the tech and telecom, retail and consumer, media, healthcare and financial and business services.

In 2005, Apax Partners purchased a majority stake in Travelex (the worlds largest foreign exchange company) for £1.06bn. Also in 2005 Apax purchased Grupo Panrico, one of Spain's largest food companies and its largest barkery company. As part of the Velvet Acquisitions consortium (along with Barclays Capital and Robert Tchenguiz) Apax is involved in the purchase of Somerfield, the UK's fifth largest supermarket chain (with 1,300 stores). At the end of 2005, it was announced that Apax Partners had purchased the Tommy Hilfiger Corporation for $1.6 billion, or $16.80 a share, all in cash. In May 2006, this deal was approved by the shareholders of Tommy Hilfiger. Apax Parnters has invested in several other public and privately-held realtors and clothing designers, such as Phillips-Van Heusen, Tommy Bahama, Spyder Active Sports, Dollar Tree Stores and the Children's Place.

The Gitam - Apax Partners agreement was that it would receive appropriate remuneration considering the size of the tender, the risk it undertook, and the scope of services granted, Gitam claims.
Gitam says the parties agreed that it would get $880,000 cash and $4 million if Apax won. Also, Apax was to arrange for Gitam to become Bezeq's ad agency, handling advertising accounts for it and its subsidiaries through three years. It claims to have fulfilled its part of the agreement, and to have granted Apax advisory and advertisement services that required endless resources, including a tremendous amount of working hours by its best experts, including Theumim.

Theumim illustrates the finest in creative thought in Israel.
Doubtful that this Israel advertising icon will allow anyone to "stiff" Gitam.

Theumim, an advisor to numerous Israel politicians and businessmen, is known to to be close to Israel Prime Minister Ehud Olmert and other cabinet ministers, notably Nobel Peace Price winner and former Israel Prime Minister Shimon Peres and Haim Ramon. Moshe Theumin is also on the board of the Jewish Agency and the Peres Center fpr Peace. His Israel advertising firm Gitam represents several of Israel's top ten companies, including Teva, Bank Hapoalim, IDB, and Tnuva. International clients include L'Oreal, Nestle, Sony, Pepsi, Kimberly Clark, Wrigley, Microsoft, and Nokia. He is also an advisor to several Jewish billionaires including Charles Bronfman, Canada Gerry Schwartz, Pierre Besnainou of France, Russia - Israel Arkadi Gaydamak, Los Angles Haim Saban and Frank Lowry from Australia.

In the course of the tender, Apax joined up with a consortium led by Chaim Saban.

Gitam work proved its merit when Apax won the tender, Gitam argues.

But oddly enough, Apax refused to pay Gitam. Nor did it act to give the Israel based Bezeq account to Gitam. In an exchange of letters, Apax never denied that it owes money, Gitam claims: all its claims were in respect to inability to influence the decision over who handles the Bezeq group advertising account.

The victors celebrated at a party attended by then- Israel Finance Minister Binyamin Netanyahu, Israel Communications Minister Dalia Itzik and others.

The problems began, the suit alleges, when the time came for Apax to pay Gitam. According to the suit, filed by attorney Ya'acov Weinroth, Apax inexplicably postponed payment, with Stephen Grabiner, who led the negotiations on the payment for Apax, stating that it was not avoiding its obligation, but was looking for different ways to carry it out. Andrew Robertson, president of BBDO international, which holds 49 percent of Gitam stock, was also involved in the negotiations, and was also stalled by Grabiner, according to the suit.

Apax has yet to file for permission to defend itself and could not be reached by the Israel News Agency for comment.