To merge or not to merge?

It feels good to see things finalized, even if you are not a part of it in anyway! So this news has to go on my blog  🙂 I remember seeing soooo many times news about this possible telecom merger while doing the newsletter in NSN…one week, the merger was going well, the next one was not and so on… now, after more then 1 year since I saw those news, finally they approved the merger!  🙂 I am not working in NSN anymore, and this is not a thematic telecom blog, is just my personal space, but this has to go on my blog, it is tooo nice news for me considering how much time I used on reading info about this….is was almost implied that every week we will have more or less the same news….not a clear merger situation anyway!

Fri Jun 25, 2010 4:23am EDT

UPDATE 1-MTS, Comstar boards approve merger, shares up

* MTS offers to buy 9 pct of Comstar at 220 roubles/share


* MTS shares up 2.3 pct, outperforming the market

* Merger exchange ratio 0.825 MTS shares for 1 Comstar share

* Deal completion expected in Q1 2011

(Adds quotes, details, background, analyst comment)

MOSCOW, June 25 (Reuters) – The boards of Russia‘s top mobile operator MTS (MBT.N) and its Comstar (CMSTq.L) fixed line unit on Friday recommended a merger between the two in an up to $1.03 billion bid to cut costs and offer more services.

MTS, which currently holds 62 percent in Comstar, has offered to buy another 9 percent from minority shareholders at 220 roubles ($7.08) per share, implying an 8 percent premium from Thursday’s close of $6.55 in the London-listed GDRs.

Those who do not take up the offer will then be able to swap each of their shares in Comstar for 0.825 of a shares in MTS, the two companies said in a joint statement.

Shares in MTS (MTSI.MM) were up 2.3 percent at 241.94 roubles and shares in Comstar (CMST.MM) were up 2 percent by 0800 GMT, outperforming a flat broad market index MICEX .

The deal — which will create the largest integrated telecommunications provider in Russia and the CIS — is expected to be completed in the second quarter of 2011.

The parameters were in line with figures reported earlier by Kommersant business daily. [ID:nLDE65O03J]

Any MTS or Comstar shareholders who vote against the deal will be able to sell their shares back to the company concerned, at 245.19 and 212.85 roubles respectively, as per Russian law.

“In the event of full election of the cash alternatives, through the VTO and the sale of shares back to Comstar, the implied transaction value could be up to $1,030 million,” the statement 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,” MTS Chief Executive Mikhail Shamolin said in a statement.

“In particular, the merger is expected to streamline common business processes and further optimise operating and capital expenditure.”

Analysts at Troika reiterated their “buy” recommendation on both stocks, saying the deal would be “value accretive”. (Reporting by Dmitry Sergeyev and Toni Vorobyova; Editing by David Holmes) ($1=31.06 Rouble)