VimpelCom board clears Wind acquisition
Telenor has pledged to stick with Russian carrier VimpelCom despite losing a battle to prevent the take over of Wind Telecom.
VimpelCom’s board approved the Wind merger at a special general meeting this morning, after shareholders narrowly voted through measures to allow the creation and issue of new shares that will be used to cover the €5 billion acquisition cost.
The deal was approved by 53% of shareholders with voting rights on VimpelCom’s board, despite 60% of public shareholders voting against the deal.
Telenor spokesman Dag Melgaard said the deal wouldn’t have gone ahead if additional voting rights available to shareholder Altimo through preferred shares were exercised. In that case, the deal would have been rejected by 51.5% of voters, he noted.
"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.”
VimpelCom chief Alexander Izosimov states the merger will create a global mobile operator with a combined subscriber base of 173 million that has the potential to generate synergies of $2.5 billion (€1.7 billion). “The combined group will have a significantly diversified revenue base, [and] substantially larger scale of operations,” he noted.
While the Russian carrier expects the acquisition to close during 1H11, Telenor said it will continue with arbitration proceedings to ensure a pre-emptive share issue is triggered by the deal.
Telenor has fought the deal tooth-and-nail since it was first proposed in December, claiming it doesn’t offer good value to shareholders. The view was backed up by financial voting advisors Institutional Shareholder Services, which claimed the deal could drive down the value of VimpelCom shares.