Telenor objects to VimpelCom, Wind deal

Michael Carroll
18 Jan 2011

Telenor has vowed to block VimpelCom’s move to acquire Wind Telecom, after the Russian carrier’s board approved the purchase yesterday.

The Norwegian carrier claims the deal makes no financial or strategic sense because the structure means Wind will end up with voting rights of 30.6% in VimpelCom despite only holding a 20% stake in economic terms.

Six board members gave the deal the thumbs up at a meeting yesterday, beating Telenor’s three members who voted against.

"We did not support the original proposal because it did not make strategic or financial sense. The revised proposal makes even less sense as the consideration now being offered is even more generous to the owners of Wind Telecom,” Telenor spokesman Dag Melgaard explains.

Telenor argues the deal will reduce the voting rights of minority shareholders from 18.6% currently to 12.9%, despite those stakeholders owning 16.3% of VimpelCom. The telco itself owns 39.6% of VimpelCom, which gives it 36% of voting rights.

“In our view, the disconnect between economic and voting stakes negatively affects the attractiveness of VimpelCom as an investment case for public investors,” Melgaard said.

The telco vows to vote against the issuance of new shares – a key aspect of the takeover – at a shareholder meeting later today.

Jo Lunder, VimpelCom’s chairman, refuted Telenor’s accusations, claiming the deal will “create a top-tier global telecoms company and should drive significant value for all our shareholders.”

If the deal goes through it will create the world’s sixth-largest telco by subscriber numbers, and leave VimpelCom in full control of Wind and with a controlling 51.7% stake in Wind subsidiary Orascom Telecom.

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