VimpelCom said that its board had given final approval for its proposed merger with Wind Telecom (formerly Weather Investments), which was swiftly followed by a statement from VimpelCom shareholder Telenor stating it will “try to stop the acquisition from being completed.” At the heart of Telenor’s discontent appears to be a disparity between economic and voting rights in the combined business. Under the new terms, Wind Telecom shareholders would have a 20 percent economic interest, but a 30.6 percent voting interest in the combined business. Telenor would have a 31.7 percent economic and 25 percent voting stake. According to Telenor spokesman Dag Melgaard (pictured): “We did not support the original proposal because it did not make strategic or financial sense.  The revised proposal makes even less sense as the consideration now being offered is even more generous to the owners of Wind Telecom.” In order to generate further support for its case, Telenor has also said that the deal is negative for the minority shareholders in VimpelCom, stating that “in our view, the disconnect between economic and voting stakes negatively affects the attractiveness of VimpelCom as an investment case for public investors.”

Telenor also highlighted a transaction which it described as “an artificial construct aimed at depriving Telenor of its pre-emptive rights” as specified under the VimpelCom shareholders agreement. Initially, the VimpelCom/Wind transaction was classified as “unrelated M&A,” meaning Telenor would have full pre-emption rights under the existing deal. However, subsequently Gleb Fetisov, an indirect minority shareholder in Altimo, acquired 0.7 percent of Wind’s Orascom Telecom Holding arm (worth around $27.7 million), which therefore turns the deal in to a “related party” transaction, removing Telenor’s pre-emptive rights. Aside from the Telenor discontent, VimpelCom says it is “interested in exploring with the Algerian government a resolution which would allow VimpelCom to retain Orascom Telecom Algeria following completion of the transaction,” following a long running dispute between the authorities and Weather about the future of this business. Should this not be possible, it has agreed a “value sharing arrangement” with Weather, which “provides for any financial losses or gains arising from the sale of all or part of OTA to the Algerian Government or from the eventual settlement of the disputes between OTA and the Algerian Government to be shared in certain pre-agreed proportions between VimpelCom and Weather II.” This is said to provide “significant downside protection for VimpelCom in Algeria.”