The shareholders of Russian company VimpelCom Ltd approved on March 17 the merger with Wind Telecom, owned by Egyptian businessman Naguib Sawiris.
VimpelCom announced the same day that it had received all the necessary regulatory approvals to complete…
The shareholders of Russian company VimpelCom Ltd approved on March 17 the merger with Wind Telecom, owned by Egyptian businessman Naguib Sawiris.
VimpelCom announced the same day that it had received all the necessary regulatory approvals to complete its merger.
The transaction got 53.3% of the voting shares at the Special General meeting, but of the public shareholders, 39.8% voted in favour and 60.2% against.
The deal is expected to create the world’s sixth biggest telecoms carrier.
In a statement, Vimpelcom said that it had received approval from regulators in Italy, Pakistan and Ukraine, which represented “all the necessary regulatory approvals needed” for the completion of the deal.
Vimpelcom now expects the merger to be completed in the first half of 2011, although it remains subject to certain conditions, including the receipt of funds for the financing of the transaction Newswire reports suggested that VimpelCom could be planning a bridge loan of US$2.5bn to finance the deal.
Wind Telecom’s shareholders will be issued with common and preferred shares in VimpelCom that represent a 20% economic interest and 30.6% voting interest in the company.
According to a Wind Telecom statement, the combination of these companies had pro forma net operating revenues of US$21.3bn and pro forma EBITDA of US$9.4bn in 2009.
It added that the net debt-to-EBITDA margin was expected to decline 2x within two years, which would place “the company in a stronger position than other global telecom industry players”.
Some parts of Wind Telecom will be de-merged as part of the deal, going to Wind Telecom’s shareholders.
This includes Orascom’s investments in Egypt and North Korea. It also includes Wind Telecomunicazioni’s investments in the international IP, voice and data services provider WIS and the Italian portal, Libero.
Wind Telecom’s chairman, Naguib Sawiris, said in a statement that following the industry trend towards consolidation, there would only be space for larger global operators in the market.
He said: “We look forward to continuing to play a significant role in the global telecom industry as part of one of the biggest telco players in the world.” Yet not all of the parties involved in the deal came away pleased.
Norwegian incumbent Telenor, one of the two major shareholders in VimpelCom alongside Russian investor Altimo, has been a strong opponent of the deal.
In a statement, Telenor confirmed its continued commitment to VimpelCom, but made clear its reservations on the deal. Its spokesman noted that 60.2% of the unaffiliated shareholders in VimpelCom had voted against the proposed resolutions. He added that if Altimo’s additional voting rights (through its allocation of preferred shares) were excluded, a majority of 51.5% of the total economic interests in VimpelCom had rejected the deal.
He said: “Even though we believe Vimpelcom would have been better off without this deal, we will now continue to work in the best interest of Vimpelcom and its shareholders, as well as to help ensure that management eventually deliver positive results from both the existing and the newly acquired operations.” Telenor also said that it would continue its arbitration proceedings in London to secure the pre-emptive rights it said it was deprived of as a result of the Wind transaction.
Vimpelcom is being advised by Akin Gump Strauss Hauer & Feld, Deutsche Bank and UBS.
Wind Telecom has EFG Hermes and Lazard as M&A advisers, while its legal advisers are Cleary Gottlieb Steen & Hamilton and Ibrachy Law Firm.
Citigroup was the financial adviser and also provided a fairness opinion to Vimpelcom’s supervisory board.
