Russian billionaire Mikhail Fridman’s bid of as much as $1.8 billion for full control of Egypt’s Orascom Telecom Holding SAE failed after holders of about 16 percent of the shares accepted the offer. Orascom shares rose.
Investors holding 834.5 million Orascom shares accepted the offer by Fridman’s investment firm Altimo by today’s deadline, the Egyptian bourse said. That fell short of the 1.37 billion shares or more sought by Fridman, whose carrier VimpelCom Ltd. already owns 51.9 percent of Orascom.
The result is a setback for Fridman’s bid to consolidate his phone assets in Africa and Middle East and puts pressure on him to boost his bid. Fridman reaching control of 75 percent of Cairo-based Orascom would pave the way for him to delist the carrier and fully combine it with VimpelCom, reducing costs, according to Alexander Kazbegi, a Renaissance Capital analyst.
“The acceptance rate shows the price wasn’t generous enough for shareholders,” Ahmed Adel, an analyst at Cairo-based Naeem Brokerage, said by phone. “The rejected offer price sets a bottom line for future offers.”
Orascom Telecom shares advanced 1.3 percent, the most in almost six weeks, to 4.57 Egyptian pounds (65 cents) at the close in Cairo, valuing the company at $3.4 billion. Altimo’s offer was 70 cents per Cairo-listed share or $3.5 per global depository share.
Orascom’s board had recommended that shareholders reject the offer as too low. The offer undervalued the company by as much as 36 percent, especially if the company avoids a $1.3 billion fine in Algeria by reaching a resolution to an ownership dispute over its local unit with the government, Orascom’s valuation adviser said last month.
Altimo made its bid through its Baskindale Ltd. unit, which is now banned from making another offer for Orascom Telecom for six months, according to Egyptian Financial Supervisory Authority regulations. Altimo said last week it won’t raise its offer price.
Altimo said today it will apply for permission from EFSA to buy the 16 percent of shares tendered even as the amount didn’t reach the minimum sought.
Should Altimo obtain the 16 percent, the stake controlled by it and VimpelCom combined would be about 68 percent. That might be enough to prompt Fridman to attempt to delist Orascom, said Renaissance’s Kazbegi, who is based in Moscow. While a 75 percent support is needed for such a move to pass in a shareholder meeting, Fridman’s stake may be large enough as some shareholders normally skip meetings, Kazbegi said.
Altimo Vice President Evgeny Dumalkin declined to comment on any delisting plan. Orascom’s investor relations head Mamdouh Abdel Wahab declined to comment on the tender offer.