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VKontakte Owner Sues for Messenger After WhatsApp Is Bought

VKontakte’s second-largest shareholder sued Pavel Durov, the founder of the Russian social network, over control of a separate mobile-messaging service he developed.

United Capital Partners, which owns 48 percent of the social network’s holding company, VK.Com Ltd., started legal proceedings in the British Virgin Islands against Durov and billionaire Alisher Usmanov’s Mail.ru Group Ltd. (MAIL), which holds the remaining 52 percent of VK.Com, according to a UCP statement today.

The fund claimed that VK.Com is the proper owner of the messaging service, called Telegram. Durov, also VKontakte’s chief executive officer, says he used his own money and assets to develop Telegram, which is run by a nonprofit entity he helped set up in Berlin. The service gained popularity after Facebook Inc. (FB) agreed to buy similar messenger WhatsApp for $19 billion this year, and has 35 million users.

Durov “has improperly diverted to himself corporate opportunities which he was duty bound to pursue, if at all, within the business of VK.Com,” UCP said in the statement.

Shares of Moscow-based Mail.ru fell as much as 8.5 percent and lost 7.1 percent to $32.50 at 2:08 p.m. in London trading.

Seeking to protect VKontakte’s interests and ultimately place Telegram under VK.Com’s control, UCP said it bought “three companies that manage certain aspects of Telegram business,” with the intent to transfer these businesses to VK.Com.

Family Control

UCP acquired Telegram LLC, Digital Fortress and Pictograph from Axel Neff, a former Telegram manager in the U.S., Alexander Chaychits, a spokesman for UCP, said by e-mail. Durov confirmed this, saying UCP “unlawfully” gained access to the U.S. companies, which hold rights for the Telegram trademark on U.S. territory.

Telegram’s infrastructure, technology and team remain “under my and my brother’s control outside of the U.S.,” Durov said in comments e-mailed by his press office. This means UCP’s actions may, at most, result in a change of Telegram’s name in the U.S., he said.

Mail.ru unit Bullion Development Ltd. said today it filed for arbitration proceedings against UCP, saying its purchase of the 48 percent stake in VK.Com last year was in breach of a shareholder agreement. Bullion, in its statement, didn’t specify the court or the region where the legal proceedings were filed.

“Mail.ru is expressing support to Pavel Durov,” Mail.ru said in an e-mailed statement. “Our main goal is that VKontakte product, enjoyed by many, isn’t damaged.”

Durov co-founded VKontakte in 2006 and sold his 12 percent stake this year.

To contact the reporter on this story: Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Mark Beech, Ville Heiskanen

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