MegaFon Completes Deal to Buy 25% Stake in Russian Phone Retailer
Published on: 7th Dec 2012
Note -- this news article is more than a year old.
By: Ian Mansfield
Russia's MegaFon says that it completed a previously announced transaction to acquire an indirect 25% interest in Euroset which owns the largest chain of mobile telecom retail outlets in Russia.
Euroset operates more than 5,000 retail stores in more than 1,500 cities and towns in Russia and Belarus, and is currently one of the largest Russian employers with almost 30,000 employees.
Under the transaction, a holding company, Lefbord Investments, owned equally by MegaFon and Garsdale Services Investment, has acquired 50% of Euroset for USD1.07 billion. Additional payment of up to USD100 million may be made if Euroset meets certain targets in the first half of 2013.
One year after closing, MegaFon is expected to buy Garsdale's 50% stake in Lefbord and thus taking its holding in Euroset to 50%.
"For MegaFon, the acquisition of shares in Euroset is an investment in a strong and successful company. As an investor we will support the growth of Euroset's business and its further development, through effective implementation of a competitive strategy", said Ivan Tavrin, CEO of MegaFon. "Naturally, we are planning to expand our cooperation with Euroset and make its services even more available for our clients", he added.
The remaining 50% of the phone retailer is owned by the rival mobile network, Vimpelcom.
Vimplecom owned 49.9% of the company - but at the same time as the MegaFon deal was completed, Vimplecom raised its stake to exactly 50% as well, buying out the 0.1% stake from the unnamed owner.
It is worth noting that both MegaFon and Vimplecom share a major shareholder, Russia's Alfa Group, so it is not expected that there would be any major issues with the two companies sharing the phone retailer.