Russian billionaire Mikhail Fridman’s US$2.8bn offer for 13.76% of Turkcell, which would give his Alfa Telecom Turkey investment vehicle indirect control of the operator, is unlikely to succeed.
According to analysts, there is little appetite to see…
Russian billionaire Mikhail Fridman’s US$2.8bn offer for 13.76% of Turkcell, which would give his Alfa Telecom Turkey investment vehicle indirect control of the operator, is unlikely to succeed.
According to analysts, there is little appetite to see ownership of Turkcell pass into foreign hands and the bid may be part of a larger strategic play.
Alfa is looking to buy the 51% of Cukurova Telecom Holding that it doesn’t already own. Cukurova Telecom Holding owns 52.91% of Turkcell Holding, which in turn owns 51% of Turkcell.
The shares Alfa has offered to buy are being held by the state-owned Ziraat Bank, which is holding the stock as collateral for extending a US$1.6bn loan to Cukurova Finance International, controlled by Fridman’s boardroom rival and Turkcell founder Mehmet Emin Karamehmet.
The offer represents a 93.5% premium on Turkcell’s closing share price yesterday, valuing the operator at more than US$20bn, yet in spite of this analysts do not expect it to be accepted.
Vera Sutedja, analyst at Erste Group Research, said the likelihood of the Turkish State allowing the deal was minimal.
“For only US$2.8bn, the state would give up control over the biggest telecom asset in the country. Why would the state appoint Ziraat Bank to bail out Cukurova in the first place?” she asked.
Sutedja was convinced that the Turkish government wanted to keep ownership of the operator in the country.
Ondrej Cabejsek, analyst at Wood & Company, also said it was “highly unlikely, for strategic and national security reasons, that the government would let the Turkish controlling shareholder sell its stake to a Russian (or any other foreign) entity”.
Cabejsek suggested that Alfa will know this and may be trying to force Cukurova to buy its stake at a hefty premium.
He pointed to a mechanism within the Cukurova Telecom Holdings’ shareholder agreement which might help to end the impasse. The “deadline option notice” can be invoked in certain circumstances when there is significant disagreement at board level and it can set into motion a process whereby competing shareholders either buy out the other party or sell their shares and exit.
Cabejsek suggested the offer could be the deadline option notice. Nevertheless, he saw the chances of Cukurova being forced to buy out Alfa as unlikely. If Alfa was able to buy out Cukurova through the mechanism, any deal would still be subject to regulatory approval, which Alfa is unlikely to be able to obtain.
