VimpelCom to acquire Weather Investments' assets
Russian telco strikes deal with Egyptian entrepreneur Naguib Sawiris to create a telecoms giant
VimpelCom, Russia's second biggest mobile operator, has signed a deal to acquire most of the assets of Weather Investments, the investment vehicle that controls Egyptian telco Orascom Telecom, and Italian operator Wind Italy.
The $6.6 billion deal, which will create the world's fifth largest mobile operator by subscribers, with a footprint in Eastern Europe, Africa, Asia and Italy, will see VimpelCom take ownership of 51.7% of Orascom Telecom and 100% of Wind Italy.
VimpelCom will make the acquisition for shares and cash. Weather will receive $1.8 billion in cash and a 20% stake in the expanded operation, worth about $4.8 billion.
Weather will gain two places on VimpelCom's board of eleven members, while other investors in the Russian group, Norway's Telenor and Russia's Altimo, will each continue to designate three board members. Sawiris will join VimpelCom's supervisory board.Weather's shareholders will gain 18.5% voting rights in the enlarged VimpelCom group.
Naguib Sawiris, chairman, Weather, said the two groups share a "common vision" of the potential of the new group.
"I am confident that our minority shareholders in Orascom Telecom will benefit from the synergies created by the combination of the two entities."
He pinpointed benefits in procurement and "de-risking" of the Orascom Telecom balance sheet as two of the major benefits of the deal.
Alexander Izosimov, CEO, VimpelCom, said that the deal will offer the company "exposure to attractive growth markets" in Asia and Africa.
"It positions VimpelCom to take full advantage of the significant opportunities that we see in the fast-growing mobile data services market and to leverage the experience that already exists in this area within Wind Italy and other parts of the Weather group," he said.
On completion of the deal, VimpelCom will become the fifth largest mobile operator in the world by subscribers, with operations in a total of 20 countries in Europe, Asia, Africa and North America, with some 850 million people living within its coverage area.
The deal follows closely from Sawiris's failed attempt to merge his telecoms assets with South Africa's MTN Group earlier this year.