General director of the Russia's second-largest mobile phone operator VimpelCom
Alexander Izosimov
Photo: Alexey Kudenko
| Other Photos |
 |
|
 |
VimpelCom Won't Reach the Star
// Plans to buy Kievstar off
The largest ever Russian business acquisition abroad is not to be. VimpelCom has withdrawn its offer to buy the Ukrainian cellular operator Kievstar for $5.456 billion due to the inability of its two largest shareholders, Alfa Group and the Norwegian Telenor Co., to come to an agreement. This was announced yesterday by VimpelCom head Alexander Izosimov as he summed up the company's dealings in the first quarter of the year. “The acquisition of Kievstar was dependent on the conclusion of an agreement on a market mechanism for its main shareholders to leave the company,” he explained.
Telenor insisted that a mechanism based on the duel system to discontinue their partnership be the main condition for the merger of VimpelCom and Kievstar. Under the duel system, any shareholder in a conflict can begin the process to leave the company with only one shareholder that is ready to purchase 100 percent of the company's shares. That prevented the acquisition of Kievstar, since Alfa Group was unwilling to buy the complete united company. “Telenor consciously advanced unfulfillable conditions,” Kirill Babaev, vice president of Altimo, the company that manages Alfa Group's communications holdings. “But we are prepared for further dialog, if Telenor is prepared to return to negotiations with sensible business conditions.” Telenor representatives called a mechanism for ending the partnership the “only fair and possible condition on the deal,” and said that the company would return to negotiations if that condition were accepted by Altimo.
The proposal to buy Ukraine's largest cellular operator Kievstar was made by VimpelCom in February. The largest shareholders in both Telenor and Alfa Group were to exchange their packages in VimpelCom and Kievstar with the result that Alfa and Telenor would receive 36.3 and 36.1 percent, respectively, in the united company. “The current situation suits Alfa,” J'Son & Partners analyst noted. “Conflict is Alfa's natural element and it gained significant benefits during the merger negotiations, improving relations with the VimpelCom management and strengthening its position in Kievstar. Maybe Alfa did not need the merger as much as the tactic victory in the course of merger negotiations.” FK Uralsib analyst Konstantin Chernyshev noted that “VimpelCom is aggressively developing in Ukraine and will soon reach a volume of investment that will mark a point of no return, after which merger with Kievstar will lose all meaning.”
VimpelCom ADR had risen 4.95 percent on the NYSE by 9:00 p.m. Moscow time yesterday on the strength of the company's first quarter results, in spite of the failure of the negotiations.
Dmitry Zakharov
All the Article in Russian as of June 02, 2006
|
|
|
