Telenor blasts Vimpelcom- Weather deal
Vimpelcom's $6.6 billion bid for telecoms assets owned by Weather Investments was hanging by a thread after Norwegian shareholder Telenor said on Monday it would not back the move.
Telenor's opposition to the deal -- which would see Vimpelcom taking control of Egypt's Orascom Telecom and all of Italy's Wind -- means all three independent Vimpelcom directors must back the long-troubled transaction.
The deal, which has been backed by the Kremlin, would make Russia's No.2 mobile phone operator the world's fifth-largest.
Analysts said the move undermines the long-term stability of Vimpelcom by once again pitting Telenor against its other major shareholder Altimo -- the telecoms arm of Russia's Alfa Group run by billionaire Mikhail Fridman.
The two owners fought protracted board and courtroom battles over strategy for years before a 2009 resolution.
Telenor spokesman Dag Melgaard said the deal did not make "strategic or financial sense" for shareholders.
"We are signaling our position, knowing there is no way that we can block the deal (without support)," he told Reuters.
Telenor has 36 percent of voting rights in Vimpelcom and three of the nine Vimpelcom board members. The deal needs six of nine votes, meaning three Altimo board members and three independents must back it to neutralise Telenor's opposition.
The acquisition also requires amendment of a shareholder agreement between Telenor and Alfa.
"I think the deal is dead," said First Securities analyst Ole Joergen Roed, adding that co-operation between Vimpelcom's two main owners now looked unlikely.
"This is positive in the short term for Telenor by reducing the chances of the transaction going through, but in the long term it may create conflict among Vimpelcom shareholders."
Vimpelcom in October announced the proposed acquisition of Weather from Egyptian tycoon Naguib Sawiris, its first major attempt at international expansion since the 2009 deal which secured Alfa's and Telenor's reconciliation.
The acquisition has met a series of obstacles, most notably the Algerian government's plans to nationalize Orascom's most lucrative asset, Djezzy, despite a trip to Algiers by Russian President Dmitry Medvedev.
Altimo and Orascom declined to comment.
Amsterdam-headquartered Vimpelcom is due to hold a two-day meeting from Tuesday to vote on final approval of the deal.
Vimpelcom said its board "will consider the interests of all of the company's shareholders in reaching its decision."
Analysts said the rise in Vimpelcom/Telenor shares could be explained by market jitters surrounding the wisdom of the deal, which will see Vimpelcom saddled with some $24 billion of debt.
The Vimpelcom deal would help Orascom pay back $3 billion in debt over the next three years and was initially seen as a way to help it reach a deal with Algerian authorities over its top revenue earner Djezzy, which Algiers says owes it back tax.
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