MegaFon to buy controlling stake in Russian internet group for $740 mn

Russian mobile operator MegaFon yesterday struck a deal to buy a controlling stake in internet group from billionaire Alisher Usmanov for $740 million.

Under the terms of the proposed deal, MegaFon, controlled by Usmanov and co-owned by Sweden's Telia AB, intends to buy 33.4 million shares amounting to a 63.8-per cent voting stake in from Usmanov, for $640 million on the closure of the deal and the remaining $100 million a year later.

The deal, which does not require MegaFon to make a mandatory buyout offer for the remaining shares, is a 24-per cent premium to share price on 22 December.

MegaFon, which expects to close the deal in the first quarter of 2017, will fund the transaction through cash and rouble-denominated debt.

MegaFon, one of the leading mobile operators in Russia, and with Mail.Ru, one of the largest Internet companies the Russian-speaking segment of the network, currently sees a significant advantage in the acquisition of shares in the share capital of Mail.Ru in order to simplify and accelerate the implementation of joint projects of companies,'' MegaFon said in a statement.

Mail.Ru is a leader in the Russian-speaking segment of the network and also owns e-mail service, and has the largest portfolio of online games, which includes projects such as Warface, Armored Warfare, Skyforge and Perfect World, and offline maps and navigation for mobile devices based on OpenStreetMap data.

With 77.3 million subscribers, Moscow-based MegaFon is the second largest mobile phone operator and the third largest telecom operator in Russia.

It competes with Mobile TeleSystems, VimpelCom, and Tele2 in the cellular market, and Rostelecom and Interregional TransitTelekom in the fixed-line market.