The US$2.64bn purchase price for a 51% stake in Algerian operator Djezzy is fair, according to the telco’s current owner, Global Telecom Holding (GTH), citing independent financial adviser HC.
In April, Russia’s VimpelCom, the majority shareholder…
The US$2.64bn purchase price for a 51% stake in Algerian operator Djezzy is fair, according to the telco’s current owner, Global Telecom Holding (GTH), citing independent financial adviser HC.
In April, Russia’s VimpelCom, the majority shareholder of Egypt-based GTH, agreed to sell the stake in Djezzy to Algeria’s sovereign wealth fund for US$2.64bn, thereby ending a long-running dispute with the Algerian government.
HC, which has valued the 51% stake at US$2.539bn, said: “the purchase price set forth hereinabove is 4% higher than the fair value of 51% of company shares resulting from the study; therefore it is our opinion that the purchase price is fair.”
The adviser added that “the continuity of the company as a current business entity depends to a great extent on concluding the deal; the alternative to maintain the dispute with the Algerian government may result in harming the company value”.
VimpelCom acquired its majority stake in Djezzy via GTH in 2010 as part of a broader US$6bn deal. However, before the deal closed, Algeria announced plans to nationalise the local operator after a dispute with GTH – then known as Orascom Telecom Holdings – over taxes and fines.
In 2012, VimpelCom said it would sell a stake to Algeria subject to reaching an agreement on price but, until this year, nothing had been decided.
Under the April agreement, GTH will keep operational control of Djezzy even though its stake will be reduced to 49% after closing.
The sale will also see the parties resolve their tax and fine-related disputes, with VimpelCom and GTH both taking a US$2bn charge in their 2013 financial statements.
The Bank of Algeria will lift foreign exchange and import restrictions on Djezzy at closing after the Algerian operator pays an AD99bn (US$1.3bn) fine.
The parties have also agreed to settle arbitration proceedings. The deal is expected to close before the end of the year.
