Russia’s MegaFon nods purchase of 63.8% in Mail.Ru for $740 mln

MOSCOW, Dec 23 (PRIME) -- The board of directors of Russian mobile operator MegaFon has approved a purchase of 63.8% of voting shares of local Internet giant Mail.Ru Group for U.S. $740 million, the operator said Friday.

MegaFon will buy 11.5 million Class A shares and 21.9 million ordinary shares in Mail.Ru Group, currently held by New Media and Technology Investment LP, New Media Technologies Capital Partners Ltd. and Ardoe Finance Ltd., subsidiaries of USM Holdings, for an agreed consideration of $640 million on completion plus an unconditional deferred payment of $100 million due in one year post completion paid in cash.

“Closer ties with Mail.Ru Group will allow us to execute common strategic projects, including, but not limited to, the creation and promotion of special offerings to digital subscribers of VKmobile based on the social network VK, and improvements in clients targeting and segmentation, which latter projects we understand have been approved by Mail.Ru,” MegaFon’s CEO Sergei Soldatenkov said.

Mail.Ru Group’s CEO Boris Dobrodeyev said potential co-operation in a number of common projects, such as the launch of the special VK branded offering and the use of predictive analytics technologies, offers new useful products to the company’s user base and new opportunities for the business.

“MegaFon is a natural partner for Mail.Ru in various areas and we look forward to working together,” he said.

The transaction is aimed at achieving significant synergies for both companies, including enhancement of MegaFon’s digital offering and its distribution, a launch of special VKmobile offering for users of VK social network, and other potential initiatives, MegaFon said in the statement.

The deal was recommended for approval by the special committee of MegaFon’s board of directors, comprised of non-executive and independent directors. MegaFon’s shareholders will meet at an extraordinary meeting on January 20, 2017, to approve the transaction. The deal is also subject to receiving consent from the local antitrust authorities, and subject to additional conditions, fulfilment of which is out of MegaFon’s control.

Morgan Stanley is acting as a financial advisor to MegaFon, and Cleary Gottlieb Steen & Hamilton is acting as a legal advisor.

Bank of America Merrill Lynch is acting as a financial advisor to MegaFon’s special committee and is providing a fairness opinion. White & Ñase is acting as a legal advisor.

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