Maxim Ali has commented on a planned deal to sell Vimpelcom to Russian management  

Veon, a Netherlands-based holding company, agreed to sell Vimpelcom to a group of top executives from its Russian branch.

Veon valued Vimpelcom at RUB 370 bn, but will eventually receive RUB 130 bn – the remainder will be repaid from debt written off on the Russian business. Under the terms of the agreement, Veon will also be entitled to receive a share of the profit if Vimpelcom is resold to a new owner for a higher price for 30 months after the deal closure as well as to terminate the agreements in case of a change of control in the acquiring company. It is expected that the deal will be closed not later than on 1 June 2023.

We would remind you that Veon’s main business is international: Russia accounts for a quarter of the more than 120 m subscribers of the mobile operators included in the structure – 53 m, the rest is accounted for by the countries of Asia and Africa. According to Maxim Ali, Partner and Head of IP/IT practice at Maxima Legal, the parent company of the holding company may have been affected by anti-Russian sanctions.

“This version seems convincing, given that the holding company is based in the Netherlands. In addition, selling the business to the top management is one of those exit schemes from the Russian market that have already been used by foreign companies. If you look at the company’s accounts, you can see that the Russian market, although key, is far from being the only one – it accounted for just under half of its revenue in 2020. Veon’s actions look like an adequate risk management in a situation of uncertainty in the Russian market and the need to retain foreign lines of business”, the expert explained to Telesputnik publishing. 

Maxim Ali drew attention to the fact that the completion date of the deal could be extended in the absence of “regulatory approvals”. “This is a very interesting point, as Veon is likely to need permission from the Government Commission for the deal. And getting it is often a tricky and always a long process. That is, the deal can be delayed for outwardly objective reasons, due to the absence of this permission. The parties themselves can also regulate the approval process to some extent. Moreover, there may be other conditions in the agreement that are not named in the press release, which would delay the completion of the deal for some time,” the expert concluded.

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