New VimpelCom deal: good news for Orascom Telecom

Bassem Abo Alabass, Monday 17 Jan 2011

The bid for Sawiris' OT has boosted the company's shares

Sawiris Orascom

Russian mobile phone operator VimpelCom's revised bid for Naguib Sawiris' assets has boosted shares in Orascom Telecom.

"Less cash with more shares. This is what the new VimpelCom offer is about," commented Walaa Hazem, Vice President of HC Securities' Asset Management Division.

According to the new deal, Sawiris will receive around $1.5 billion in cash, compared to $1.8 billion in the first offer, in addition to 330.6 million common and convertible shares.

In a six to three vote, the Russian company's board approved a revised deal to acquire assets including 51.7 per cent of Orascom Telecom and 100 per cent of Italy's Wind.

The stock market welcomed the new deal, and Orascom Telecom shares rose 1 per cent today.

"It was a wise choice from Sawiris to give up his seat on the board of the newly-merged entity in order to reach a deal," Hazem commented.

The deal will create the sixth-largest mobile company in the world, in terms of the number of subscribers.

However, according to Wael Nahhas, analyst at HA Securities, the issues surrounding Djezzy, the local unit of Orascom Telecom in Algeria, remain unresolved.

VimpelCom's primary proposal to Orascom excepts Algeria and Greece from the agreement, Nahhas added.

"VimpelCom’s supervisory board is pleased to approve this transaction. This combination will create a top-tier global telecoms company and should drive significant value for all our shareholders," supervisory board chairman Jo Lunder said in a statement.  

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