CAIRO: Finalization of the $6.6 million agreement between Weather Investments and VimpelCom was delayed until Friday, according to Al Mal, a local Egyptian newspaper, who cited Naguib Sawiris, Weather’s chairman.
The delay was attributed to a request for more time to study VimpelCom’s newest offer, following objections from the Norwegian telecommunications provider, Telenor, a major VimpelCom shareholder, that the deal doesn’t make “strategic or financial sense,” the company stated last week, according to a Bloomberg report on Dec. 22.
The Norwegian firm also stated that “When the deal was initially presented to the board, we said yes, with reservations,” the reported noted.
Reuters noted on Dec. 23 that according to analysts, Telenor takes issue with requests, which are undisclosed, by Sawiris to ensure a larger number of board members as well as more rights than his 20 percent stake in the company would allow.
Nevertheless, Sawiris commented publicly on television that the value of the deal would remain unaltered.
It has been widely reported that Telenor has voiced concerns regarding the valuation of Weather’s assets as well as Orascom Telecom’s (OT), which is part of Weather Investments, ongoing struggle with the Algerian government over OT’s subsidiary, Djezzy.
It was also reported last week that Djezzy would likely be nationalized by the Algerian government before mid-2011, which could prove to be a further complication.
Amr Elalfy, director of research at CI Capital, said that, “As we draw closer to New Year’s Eve, I am not sure if it is possible to finalize the issue on time,” which stands in contrast with what is being widely stated in media reports that said the deal will be sealed this Friday.
“I won’t be surprised if the decision was postponed further till the beginning of January 2011,” Elalfy continued.
He warned that if the delay is related to a difference in stance on issues surrounding valuation, then “Weather may well reject the revised transaction.”
Whereas if the point of contention is centered on voting power, “there might be some compromise between the two parties provided the total deal value is not affected,” he opined.
Should the stock-and-cash agreement be struck, the new company will have operations in 20 countries and net debt after the combination of up to $24 billion, which would result in the creation of the world’s largest emerging market telecommunications operators.
