Russian mobile operator MTS is proposing to buy out the minority shareholders of fixed-line operator Comstar UTS.
The company is offering 0.825 MTS ordinary shares for one Comstar ordinary share, representing a 7.7% premium to the three month volume…
Russian mobile operator MTS is proposing to buy out the minority shareholders of fixed-line operator Comstar UTS.
The company is offering 0.825 MTS ordinary shares for one Comstar ordinary share, representing a 7.7% premium to the three month volume weighted average exchange ratio between MTS’ ordinary shares and Comstar’s GDR.
Shareholders who vote against or do not vote on the merger will have the right to sell their shares back to MTS and Comstar.
MTS’ board of directors has fixed the repurchase price at Rbs245.19 per MTS ordinary share, while Comstar’s has set its repurchase price at Rbs212.85 per Comstar ordinary share.
The vote on the proposed merger is expected to take place at MTS and Comstar’s EGMs on December 23. To go ahead, it will need the approval of 75% of the shareholders present at each company’s EGM.
MTS will also launch a parallel voluntary tender offer (VTO) for up to 37,614,678 Comstar shares, representing 9% of the issued share capital of Comstar, at Rbs220 per Comstar ordinary share. The VTO price per GDR is equivalent to US$7.16, which represents a 13.1% premium to the three month volume weighted average trading price of the Comstar GDR on the London Stock Exchange.
The merger is expected to complete in Q2 2011.
MTS is advised by Goldman Sachs and Latham&Watkins. JP Morgan provided a fairness opinion to the Comstar Special Committee of Independent Board Directors, while Linklaters CIS is acting as legal adviser to Comstar. Ernst & Young provided independent statutory appraisals to MTS and the Comstar Special Committee of Independent Board Directors for the purposes of each company’s assessment of the prices to be paid to shareholders who will sell back their shares.
MTS currently owns 61.97% of Comstar (64.03% excluding treasury shares).
