Russian carrier VimpelCom closed its troubled acquisition of Wind Telecom Friday, but still faces a challenge from leading shareholder Telenor over voting rights.
The curtain came down on the long-running saga with news that VimpelCom has now completed the purchase of 100% of Wind by acquiring 51.7% of holding firm Orascom Telecom Holding for $1.4 billion (€977 million) in cash and shares. The purchase creates the world’s sixth largest mobile operator, with a combined subscriber base of 181 million at December 31, and operations in 20 countries across Europe, Africa and Asia.
VimpelCom chairman Jo Lunder said the landmark acquisition “establishes the growth platform that the Supervisory Board has strongly supported,” while chief executive Alexander Izosimov stated it opens the door to new growth opportunities covering “emerging markets, industry consolidation and the rapid development of mobile data.”
The combined entity will operate five main global business units, dispose of Orascom’s assets in Egypt and North Korea, and spin off Wind’s International Services subsidiary in Italy. VimpelCom will also re-structure part of Orascom Telecom’s debt at the holding company, although debts of the firm’s subsidiary companies will be unchanged.
Despite the fanfare, Telenor -,which holds just over 39% of VimpelCom - states it will continue with arbitration proceedings against the Russian carrier seeking the issue of pre-emptive shares to ensure its voting rights match its financial stake.
However, spokesman Dag Melgaard said the Norwegian firm remains committed to VimpelCom and will now get down to the business of making the acquisition work despite continuing to doubt its value.
“We remain confident that we will prevail in the arbitration and that our pre-emptive rights will be properly reinstated,” he states.
Dan Walsh, a partner at law firm Akin Gump Strauss Hauer & Feld which advised VimpelCom on the deal, appeared to reject Telenor’s concerns about its value, stating “"This has been a highly complex deal with multiple elements around the world. It opens VimpelCom up to new markets and provides an excellent global platform for growth.”