Vimpelcom withdraws Kyivstar offer; Telenor still confident of reaching agreement

2 Jun 2006

Russia’s second largest mobile operator Vimpelcom has recalled an offer to acquire 100% percent in Ukraine’s leading cellco Kyivstar from Norway’s Telenor and Altimo, a division of Russia’s Alfa Group. Vimpelcom had previously given both companies a period of consideration for the offer which expired on 31 May. Telenor holds a 56.5% stake in Kyivstar as well as 29.9% of Vimpelcom while Altimo owns 32.9% of Vimpelcom and 43.5% of Kyivstar. Vimpelcom’s general director Alexander Izosimov said: ‘Although the parties agreed on the timeframe for the deal, the acquisition of Kyivstar also required a termination of the partnership between Telenor and Altimo, and we have seen little progress on the issue in the last three months.’ Telenor said it was prepared to sell its stake in Kyivstar to Vimpelcom and display flexibility in payment terms, if agreement was reached with Altimo on the mechanism of partnership termination and permission from the Russian antimonopoly watchdog was obtained. Altimo said this term, advanced as a condition to close the deal, did not comply with Russian legislation and was deliberately unrealistic. Telenor said yesterday that it ‘understands’ Vimpelcom’s decision not to extend the deadline of its offer to purchase Kyivstar, but will continue to seek Altimo’s agreement on a ‘market-based separation mechanism’ to enable talks to go forward, adding that it believes that the proposed transaction is in Vimpelcom shareholders’ best interests.