Financial voting advisers say shareholders should vote against VimpelCom’s proposed acquisition of Wind Telecom, adding weight to Telenor’s attempts to scuttle the deal.
Institutional Shareholder Services claims VimpelCom’s proposal to increase its share capital and issue new shares should be rejected because the acquisition has already driven down the value of VimpelCom’s shares, and markets are likely to react badly to the deal.
VimpelCom’s share price has fallen 10% since the deal was first unveiled in October, bucking a growth trend on Russian indices, while a mixed bag of analyst responses points to overall doubt about the level of synergies the deal will generate.
The voting firm also believes the deal will terminate agreements between main shareholders Telenor and Altimo, which each hold just over 39% of VimpelCom. Losing the simple working majority created by the agreements could jeopardize minority shareholders' abilities to elect independent directors and other benefits.
Telenor CFO Richard Olav Aa states the decision validates the firm’s opposition to VimpelCom’s acquisition of Wind parent Weather Investments, which it claims doesn’t offer good value because it will dilute the voting rights of current VimpelCom shareholders.
Shareholders have until close of business on March 11 to register their votes, with results due to be presented at a Special General Meeting on March 17.
Telenor dropped a bid to have the stoppers placed on the deal earlier this week, after securing agreements from VimpelCom, Avanti and Wind regarding a pre-emptive share issue and damages.