Mobile mergers facing difficulty in North Africa, MENA

Mergers are often fraught with difficulty. In North Africa and the Middle East this has been seen as rounds of discussions with Russia’s VimpleCom and Egypt-based Wind Telecom. Telenor has vowed to block any merger of the two, in a dramatic IT battle.

VimpelCom’s board has given final approval for the merger with Wind, the holding company controlled by Naguib Sawiris, which includes Orascom Telecom plus Wind subsidiaries in Italy and Greece. But major VimpelCom shareholder Telenor of Norway promptly put out a statement saying it would “try to stop the acquisition from being completed.”

The Norwegian firm objects to the gulf between economic and voting rights in the merged business. Wind Telecom shareholders would have a 20 percent economic interest, but a 30.6 percent voting interest in the combined entity, which would equate to 31.7 percent economic interest for Telenor, but only a 25 percent voting stake.

The firm said in a press statement that “in our view, the disconnect between economic and voting stakes negatively affects the attractiveness of VimpelCom as an investment case for public investors.”

The carrier’s spokesman Dag Melgaard told Dow Jones: “We did not support the original proposal because it did not make strategic or financial sense. The revised proposal makes even less sense as the consideration now being offered is even more generous to the owners of Wind Telecom.”

By Jonathan Terry