Telenor announces acquisition of Vimpelcom preferred shares from Weather Investments II

16 Feb 2012

Norwegian telecoms group Telenor has reportedly ended a long-running corporate conflict by acquiring a block of shares in Vimpelcom Group from Egyptian businessman Naguib Sawiris. The company has announced the purchase of 234 million preferred Vimpelcom Group shares from Sawiris’ investment company Weather Investments II for USD374.4 million, announcing at the same time that it had withdrawn all claims in arbitration against both Vimpelcom and Russia’s Alfa Group; it has noted that its withdrawal of the claims will result in the termination of the Vimpelcom shareholders’ agreement. Following the development Telenor’s voting share in Vimpelcom will now stand at 36.36%, subject to adjustment arising from ‘certain put and call arrangements’. Further, it is also expected that the Norwegian group will now seek to increase the number of Vimpelcom board members from nine to eleven.

As noted in TeleGeography’s GlobalComms Database, after the Vimpelcom board approved the proposed acquisition of Wind Telecom (formerly Weather Investments), Sawiris’ original investment vehicle, in January 2011 Telenor claimed that if the purchase was completed its stake in Vimpelcom would be diluted to 31.7% economic and 25.01% voting. It subsequently commenced an arbitration proceeding in London against Altimo Holdings & Investments Ltd, Altimo Cooperatief UA and Vimpelcom later that same month, in which it claimed that it was entitled to exercise its pre-emptive rights in the context of Vimpelcom’s proposed acquisition of Wind Telecom.

Commenting on the share acquisition, Telenor CEO Jon Fredrik Baksaas said: ‘This transaction takes Telenor to approximately the same voting position as a successful outcome of the arbitration process would have achieved, and is therefore a commercial solution we are happy with … The withdrawal of the arbitration claim will prevent further dilution of the Vimpelcom shareholders, and it will enable a more normal corporate governance situation in Vimpelcom.’ Mr Sawiris, meanwhile, was cited as saying of the deal: ‘I am very happy about this transaction which will allow Weather to participate actively in the Supervisory Board of Vimpelcom, will foster improved corporate governance of the company and ensure a better focus of the management on industrial issues in a context in which the existing disputes among the key shareholders have been resolved.’

Netherlands, Telenor Group, VEON