OJSC VimpelCom, Russia's No. 2 cell-phone company, unveiled a $4.3 billion offer Friday, Dec. 21, for broadband provider Golden Telecom Inc. that will create a full-service telecom group and consolidate the stakes of both companies' minority shareholders.Moscow-based
VimpelCom said it would pay $105 per Golden Telecom share, a 3.5%
premium to the stock's close Dec. 2, the day before VimpelCom confessed
to talks with Golden Telecom and a 75% premium to the $60 at which the
stock traded before rumors of a deal first leaked in July.
Six years ago, Norwegian telecom Telenor AS linked with Russian financial firm Alfa Group Consortium
to gain a foothold in the rapidly expanding markets of Eastern Europe.
As a result, Alfa now holds 44% of VimpelCom and 26.6% of Golden
Telecom, while Telenor owns 29.9% of VimpelCom and 18.3% of Golden
Telecom.
The deal will convert cellular-phone group VimpelCom into a
full-service telecom offering broadband and fixed-line phone service in
most of the nations that once belonged to the Soviet Union. Last year
the target generated $854.6 million in revenue and $85.5 million in net
income, compared with VimpelCom's $4.9 billion in revenue and $811.5
million in net income.
"It means becoming a part of a much larger telecommunications
business with the scale and resources to thrive," Golden Telecom CEO
Jean-Pierre Vandromme said in a statement. The Golden Telecom board
recommends shareholders accept the bid.
VimpelCom will require commitments representing 63.3% of Golden Telecom's shares for the deal to succeed.
VimpelCom turned to UBS for financial advice while Akin Gump Strauss Hauer & Feld LLP provided legal counsel.
Credit Suisse Group was Golden Telecom's financial adviser. Chadbourne & Parke LLP provided legal counsel to the company, and Patricia Moran, Ann Beth Stebbins and Pranav Trivedi at Skadden, Arps, Slate, Meagher & Flom LLP advised the board.
