VimpelCom deal hits further hurdles
Russian telco's plan to acquire Weather Investments rejected by key shareholder
Russian telco VimpelCom's plan to acquire the assets of Egypt's Weather Investments faced a fresh stumbling block this week, with the Russian operator's second biggest shareholder, Telenor, rejecting the proposed $6.6 billion deal.
Three of the directors who sit on VimpelCom's nine-person supervisory board rejected the deal. The three directors, who represent Norwegian telco Telenor, rejected the deal based on price and strategy, according to a report from the Financial Times.
Telenor's rejection of the deal meant that VimpelCom's supervisory board was unable to pass a shareholder-related agreement required for the deal to progress, and was forced to advise VimpelCom to renegotiate the deal, the report added.
Meanwhile, the Algeria's telecoms minister said the government would pay a market price to nationalise Djezzy, the Algerian unit of Orascom Telecom, although he failed to indicate a price or confirm when a deal might take place, according to a report from Reuters.
The report added that Orascom Telecom had "reluctantly agreed" to talks on nationalisation of Djezzy.
The news is likely to come as a further blow to VimpelCom's plan to acquire Weather Investments, not least because Djezzy is one of Orascom Telecom's most lucrative operations.
VimpelCom, Russia's second biggest mobile operator, originally 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, in October.
The $6.6 billion deal, which would create the world's fifth largest mobile operator by subscribers, with a footprint in Eastern Europe, Africa, Asia and Italy, would see VimpelCom take ownership of 51.7% of Orascom Telecom and 100% of Wind Italy.
VimpelCom was expected make the acquisition for shares and cash. Under the terms of the original deal, Weather would receive $1.8 billion in cash and a 20% stake in the expanded operation, worth about $4.8 billion.