UPDATE 3: USM gives control of stake in Mail.Ru to Internet firm’s mgmt

(Adds expert comments in paragraphs 9–10)

MOSCOW, Oct 22 (PRIME) -- USM Holdings has handed over control of its share in Mail.Ru Group to the Internet company’s management in the name of General Director Boris Dobrodeyev, according to a statement made by USM Holdings’ founder and co-owner Alisher Usmanov, seen by PRIME on Monday.

“I’ve been preparing this transfer over recent years because I’m sure that high-technology companies should be headed by a young generation: talented and ambitious people, attuned to trends of development of the modern digital business,” Usmanov said.

“I’m leaving the management board light-heartedly: our business and financial results have never been higher, and the team of Mail.Ru Group is brilliant professionals. I’m certain that under their rule, the holding will strengthen its position on the market even more.”

Mail.Ru Group announced on Monday changes on its board of directors. “MF Technologies (MFT) has nominated Boris Dobrodeyev, Dmitry Sergeyev, Alan Vaksman, and Sergei Mednov as new directors to the board of the company to replace Sergei Soldatenkov, Ivan Streshinsky, Anna Serebryanikova, and Vlad Wolfson,” Mail.Ru Group said.

MFT is a joint venture set up by MegaFon, USM, state industrial corporation Rostec, and local bank Gazprombank, to which MegaFon contributed its stake in Mail.Ru Group, or 5.23% of capital and 58.9% of votes. MegaFon owns 45% of MFT; Gazprombank 35%, Rostec 11%, and USM has 9%.

“MFT has informed (Mail.Ru Group) that USM is no longer the ultimate controlling party of Mail.Ru Group and that as a result there is no single party controlling Mail.Ru Group via MFT. There is no change in the ownership of MF Technologies,” Mail.Ru Group said in a statement.

“Today MFT has also informed Mail.Ru Group that going forward the CEO (Russia) of Mail.Ru Group will be authorized to exercise the voting rights of the shares held by MegaFon and USM in MFT. As such MFT has also nominated Boris Dobrodeyev and Dmitry Sergeyev to the board of directors of Mail.Ru Group. Changes in the board of directors do not affect Chairman of the board Dmitry Grishin. This ensured the presence of three representatives of Mail.Ru Group on the board of directors.”

General Director of USM Management Ivan Streshinsky said, “We think that giving the Mail.Ru Group’s team, represented by the CEO, the ongoing right to vote our shares in MFT we are giving the clearest sign of our backing for the team and its strategy. We do not anticipate any further changes in the structure of MFT.”

SOVA Capital analyst Alexander Vengranovich said the withdrawal of people of USM Holdings from Mail.Ru Group’s board of directors and the transfer of their votes to the company’s management reduce risks in case of Western sanctions against its shareholders.

“I think they try to curb down sanction risks. We’ve already seen a series of changes of shareholders. Now, formally, after the deal with Alibaba, neither MegaFon nor Usmanov will have votes on decisions of the board of directors of Mail.Ru Group after today’s announcement. Consequently, they try to show that there is no direct link between Mail.Ru and potentially risky companies that could face sanctions,” Vengranovich said.

USM to focus on e-commerce

After quitting Mail.Ru Group, USM Holdings will develop e-commerce during the next five to 10 years and wants to create a big player in this industry in Europe.

“I’m sure that the future belongs to high-technology companies and Internet projects. There are their own leaders on the market of social networks, where we invested in Facebook, Twitter, and VKontakte in our time, and we see a huge undeveloped market of e-commerce, and we’ll dedicate the coming five to 10 years to its development,” Usmanov said.

“One of my targets for the nearest years is to jointly with our partners from Alibaba to create the biggest e-commerce company in Europe, stealing competitive advantage from such retail giants as Amazon and Ebay.”

In September, the Russian Direct Investment Fund (RDIF), local mobile operator MegaFon, and Mail.Ru Group announced setting up an e-commerce joint venture with Chinese behemoth Alibaba about AliExpress in Russia and Pandao. The partners plan to close the deal in January–March 2019.

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