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April 24, 2012 9:23 pm
Peace has broken out in one of Russia’s longest-running corporate battles, with the oligarch Alisher Usmanov set to take over the country’s second-biggest mobile operator.
Mr Usmanov, a Kremlin-friendly tycoon and shareholder in Arsenal Football Club, is raising his stake in Megafon from 26 to 50 per cent plus one share in a deal likely to pave the wave for a London listing.
Selling down their stakes are Sweden’s Teliasonera and Mikhail Fridman’s Alfa Group, which have butted heads with Mr Usmanov over Megafon’s strategy and who are now looking at big payouts.
Alfa will sell its entire 25 per cent stake for $5.2bn – more than 15 times what it paid in 2003 – to Mr Usmanov and Megafon’s management. Teliasonera will sell 8.2 per cent of its 44 per cent stake for $1.5bn before ultimately reducing it to 25 per cent through a London listing as early as July.
The company’s listing is likely to be in the form of global depositary receipts – securities that track underlying shares – according to people familiar with the matter. Bankers say a London listing could value the business at up to $20bn.
Alexei Reznikovich, chief executive of Alfa’s telecoms arm Altimo, told the Financial Times that the peace agreement had managed to satisfy each party’s interest. “[Mr Usmanov] gets control. Teliasonera gets liquidity through dividends and a potential IPO ... and will keep a minority position. And Altimo realises the value of its investment from a financial standpoint in a very nice way.”
The sale will enable Altimo to focus on VimpelCom, the global telecoms group where there has also been a strained relationship with fellow shareholders such as Norway’s Telenor, and on mobile operator Turkcell, where it is in a legal dispute with tycoon Mehmet Karamehmet, a fellow Turkcell shareholder.
Megafon will pay a $5.2bn dividend to shareholders based on their holding sizes, which will pave the way for a regular dividend policy – a potential selling point for the IPO. The company has promised to give 50 per cent of net income and 70 per cent of cash flows back to shareholders.
Of the 12 Russian companies that launched roadshows for London listings last year, half made it to market, with most of the pricing at the lower end of their intended price range.
The deal comes as Russia prepares to roll out 4G mobile services, and analysts have speculated that Megafon could try to link with a state-owned group such as Russian Technologies or Rostelecom for the task – something that would be facilitated by Mr Usmanov’s ownership. Mr Usmanov was originally brought into Megafon in 2006, buying his stake from a company with ties to top politicians that had been feuding with Alfa at the time.
“It is unquestionable that Usmanov enjoys extremely good political connections, so a scenario where Megafon goes out and completes this deal through a merger with Rostelecom or another state-owned company I think is completely on the table,” said Steven Dashevsky, a partner at Moscow investment fund Dashevsky and Partners.
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