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MTS to buy remaining stake in Comstar
28 June 2010
Mikhail Shamolin, CEO of Russian mobile operator MTS, wants to take over the 38% of Comstar the company does not already own
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MTS
Sistema
Comstar UTS
Russia
Goldman Sachs
JP Morgan
Russian operator Mobile TeleSystems is seeking to buy the remaining share in Comstar United TeleSystems. MTS will pay $1.03 billion in cash and stock. The Moscow-based operator will also start a tender offer for 9% of Comstar’s shares.
MTS CEO Mikhail Shamolin said: “The merger will enable the full integration of the Comstar and MTS customer bases and the provision of bundled service offerings across Russia, which we believe will further enhance our combined competitive position.” Read GTB's 2009 interview with Shamolin here and our recent interview with MTS COO Mikhail Gerchuk here, about the joint MTS/Comstar marketing strategy. Both were listed in GTB's 40 under 40 -- the industry's leading executives under 40 -- in 2010.
Russian industrial giant Sistema is a significant shareholder in MTS and was also a shareholder in Comstar until the two were brought closer together in 2009.
MTS, which currently owns about 62% of Comstar, is now looking for full control of the company to cut costs and sell television and broadband offerings to tap growing demand for internet services in Russia and neighbouring countries.
The companies plan to complete the merger deal by the second quarter of 2011. Goldman Sachs has been appointed as financial adviser to MTS. JP Morgan is advising Comstar.
As a result of the deal, Comstar will be folded into MTS and will not exist as a separate unit.
Separately, the boards of the two companies have approved the sale of a 25%-plus-one-share stake in Svyazinvest to state-controlled Rostelecom for $838 million, to repay bank debt. GTB