Fridman’s Altimo May Buy Out Orascom Minorities Aiding VimpelCom

Billionaire Mikhail Fridman offered to buy out investors in Orascom Telecom Holding SAE, a unit of the world’s sixth-largest mobile operator, after his Alfa Group sold out of a Russian oil producer for $14 billion.

Altimo, a unit of Fridman’s Alfa Group with an indirect interest in Orascom, is offering 70 cents a share for the Cairo-based operator, valuing the company at about $3.67 billion, the Egyptian Financial Supervisory Authority said yesterday. That is about 8 percent higher than the closing price in Cairo before the March 31 announcement.

Altimo’s VimpelCom Ltd. works in 18 countries after acquiring control of Orascom from billionaire Naguib Sawiris in 2011. The company is seeking to end an ownership conflict with the Algerian government and has networks in Bangladesh, central Africa and Pakistan. Orascom is traded in London and Sawiris’s home country, Egypt, where it doesn’t have operations.

“It’s a good moment now to buy out Orascom minorities as the price may rise later when a settlement is reached with the Algerian government,” Anna Kurbatova, analyst at Moscow-based BCS Financial Group, said by phone. “VimpelCom, with $27 billion of debt, can’t afford to buy Orascom minorities itself, while Fridman’s Alfa Group has just got $14 billion from selling its oil business, TNK-BP.”

‘Not Impressive’

Vimpelcom is seeking to keep operating control and the right to consolidate its Algerian unit Djezzy, held by Orascom, while the local government aims to acquire a 51 percent stake. The sale of Djezzy will be a driver for Orascom’s stock, according to Ivan Kim, an telecommunications analyst at VTB Capital in Moscow.

The Algerian government and VimpelCom may reach an agreement “soon,” local newspaper Al Khabar said last week.

Buying out the 48 percent of Orascom that Vimpelcom doesn’t own may require $1.8 billion, according to BCS. “The premium to market price that Altimo offered doesn’t look impressive,” Kurbatova said, estimating Altimo may gain a 15 percent to 20 percent stake. “Not everyone will sell.”

Amsterdam-based VimpelCom doesn’t plan to sell its 51.9 percent stake to Altimo, Bobby Leach, a spokesman, said by mobile phone. Altimo’s spokesman Evgeny Dumalkin declined to comment.

“We were expecting that they would be taking Orascom out of the market, but we think it’s a very low price,” Maria Samir, a telecom analyst at Cairo-based investment bank Beltone Financial, said by phone yesterday. “It doesn’t make sense to remain listed when there are no operations in Egypt anymore.”

Orascom fell for a second straight day in Cairo after Altimo’s plan was announced, dropping as much as 2.1 percent and trading down 1 percent at 4.33 Egyptian pounds (64 cents) by 1:49 p.m. local time. The shares closed at $3.18 in London on March 28 before markets closed for the holiday weekend.

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