Russia’s Alfa Group and Norway’s Telenor Group agree to merge their assets in CIS

Under the tentative agreement, Altimo, the Alfa Group’s subsidiary controlling the Russian holding’s telecom assets in (via VimpelCom) and in Ukraine (via Kievstar), and Telenor are to create a new joint venture, Vimpelcom Ltd, which will be based in the Bermudas, to run the new partners’ respective stakes in VimpelCom and Kyivstar. Specifically, both companies will hold an almost equal equity stakes in the JV, with Altimo getting 38.84% stake against Telenor’s 38.46% stake, which will give them 43.89% and 35.42% voting rights, respectively. 

Besides, both companies will have three positions each on the JV’s nine-member board, with the remaining three seats going to independent directors. The companies will not have rights to increase their stakes in the JV in the next five years and neither the authority to veto the board’s policies. The new old partners plan to conclude all the legal requirements by March-April 2010, after which VympelCom will be delisted fr om the NYSE.

It needs to be noted here that the agreements will be subject to approvals in all countries, where the companies have operations, including Russia, Ukraine, other CIS countries and Europe. Commenting on the landmark deal, Altimo CEO Alexei Reznikovich noted the fact that both sides had been able to overcome their main problem of mutual mistrust. “Trust is often a key factor in business.”