Hutchison Whampoa is to end its planned purchase of a controlling stake in Israeli operator Partner Communications, stating that “the conditions under the agreement have not been fulfilled”.

According to local business publication Globes, Suny Electronics, the company which owns Scailex, which in turn owns the Partner stake, said that Hutchison had made “new adverse findings” during its due diligence, which would have had a material effect on the deal.

It said that these include a poor financial performance for Partner in the second quarter of 2012, and “inaccuracies” in a presentation which led to the acquisition agreement.

Globes also said that investors with Scailex bonds were not supportive of the transaction, which raised a “major question” as to whether it could go ahead or not anyway. Scailex has total debt of around US$760 million, of which US$300 million is owed to Hutchison.

Hutchison was set to acquire 50 percent of Scailex through a subsidiary, with Hutchison chairman Li Ka-shing acquiring an additional 25 percent through his other companies, in transactions with a combined value of US$125 million. Scailex is the largest single owner of Partner, which operates under the Orange and 012 brands, with a 44.5 percent stake.

At the time the deal was announced, Hutchison said that it had “resolved to return to lead Partner in the new and evolving telecommunications industry in which the company now operates”. With operations in 13 markets worldwide, it said that it will “bring to Partner its experience and capabilities in building successful telecommunications companies that serve as leaders in the telecommunications industry”.

In the second quarter of 2012, Partner lost 49,000 subscribers, with its customer base standing at 3.1 million, as competition in the market increased. It is the number two in the market, behind Cellcom, which has 3.4 million customers, but ahead of Pelephone, with 2.9 million.