VimpelCom has abandoned an attempt to take over small Canadian operator Wind Mobile after discussions with the country’s government.
In a statement VimpelCom subsidiary Orascom said it withdrew its application for Investment Canada Act approval for…
VimpelCom has abandoned an attempt to take over small Canadian operator Wind Mobile after discussions with the country’s government.
In a statement VimpelCom subsidiary Orascom said it withdrew its application for Investment Canada Act approval for the acquisition, but remained interested in working with the government to consolidate its interest in Wind.
Last week it was reported that the takeover was being delayed due to security concerns. Canadian officials were said to be concerned about Wind’s network, built by China’s Huawei, being controlled by a partly Russian-owned company. VimpelCom, Wind and Huawei all disputed the gist of the report.
VimpelCom’s proposal for Wind – agreed in January via Orascom Telecom – would have seen it buy out the target’s founder and CEO Anthony Lacavera, and ultimately hold 99.3% of the operator.
“Despite today’s announcement, I will continue working with VimpelCom toward achieving our mutual objectives,” Lacavera said in a statement.
Orascom bankrolled Wind from when it first acquired spectrum in 2008, and VimpelCom continued to fund the operator after it took over the Egyptian group in 2011. However it has been reported that VimpelCom hired UBS to find a buyer for Wind once it had completed its takeover.
It was not disclosed how much VimpelCom agreed to pay for the outstanding Wind shares, but Lacavera was set to receive cash for his stake. He holds an indirect 66.7% voting interest and 34.3% economic interest in Wind via AAL Corp.
The complex ownership structure was drawn up to get around Canada’s strict foreign investment rules, however these were liberalised last summer. VimpelCom was looking to become the first company to take advantage of the change in the law, which allows foreigners to hold 100% of telcos with 10% market share or less.
The collapse of this deal follows the government blocking Telus’ acquisition of Mobilicity earlier this month. Ottawa intends to improve wireless competition in the country and is aiming for there to be four competitive operators in each of Canada’s regions. This week Verizon has confirmed it is looking at the possibility of entering the wireless market.
