By Farah Atia
Only 16 % of Orascom Telecom Holding’s shareholders accepted the offer by Russian billionaire Mikhail Fridman who sought a minimum of 26% of shares by yesterday’s deadline to gain full control over the company. Fridman’s Altimo Holdings & Investments had offered $1.8bn to acquire the remaining 48% of Orascom shares outside the 52% already owned by Altimo’s unit VimpelCom Ltd. (VIP).
“The shareholders were expecting a higher bid price,” said Ahmed Adel, telecom analyst at Naeem brokerage. Orascom operates the Djezzy mobile network in Algeria, one of the company’s most profitable private networks. “Since 2009, there has been a dispute between Orascom and the Algerian government leading the government to take measures as extreme as freezing Orascom’s bank accounts. The dispute has not yet been resolved, but the Algerian government promised to buy as much as 51% of Djezzy, giving shareholders hope that the situation will get better, leading to a jump in Orascom’s share price.”
According to Orascom’s valuation advisor, HC Securities and Investments, Fridman’s offer is a vast undervaluation of the company; it is estimated that Orascom was as much as 36% undervalued. “Altima’s offered price was too low compared to investors’ expectations”, Adel said. “There are no recent updates on whether or not the Algerian government will proceed with the sale.”
Altimo will still proceed with the 16% acquisition worth $585m, resulting in a 68% combined stake. Altimo’s Baskindale Ltd. Unit, through which the offer was made, will not be able to place another bid for Orascom for at least six months, as stated by the Egyptian Financial Supervisory Authority. The 68% share might, however, make it possible for Fridman to delist Orascom.
“This is a big change in the game. It implies how much Altimo is keen on acquiring Orascom, raising speculations and boosting share price,” Adel explained. “Moreover, another dispute between Orascom Construction Industries and the Algerian government was resolved today, further boosting investor confidence.”
Orascom saw its stock price rise 5% today after the failed bid, the stock’s biggest surge since September 2008. According to Youssef Al-Far, CEO of Naeem Holding, “This is the best possible scenario.”
Despite the speculations, however, “it all depends on the EFSA’s decision on whether Altimo will be able to acquire the 16% stake”, according to Adel.
