Telia Company divests its stake in MegaFon

Tue, Oct 31, 2017 07:00 CET

Telia Company has agreed to sell its 19.0 percent holding in MegaFon to Gazprombank. The transaction is in line with Telia Company’s strategy to focus on the Nordics and Baltics.

“Telia Company is one of the founders of MegaFon and we have since the inception actively contributed to its success of becoming a mobile and digital leader in Russia. After recently commencing our exit from MegaFon by placing 6.2 percent of our holding on the open stock market, this divestment now puts an end to Telia Company's ownership in MegaFon in accordance with our strategy to focus on the Nordics and Baltics,” says Johan Dennelind, Telia Company’s President and CEO.

Telia Company sells its 19.0 percent holding in MegaFon which has been classified as a financial investment, at a price of RUB 514 per share, raising gross proceeds of RUB 60.4 billion (equivalent to approximately SEK 8.6 billion) with pro forma positive effect on net debt to EBITDA by approximately 0.3x. Gazprombank has agreed to a lock-up of six months from the date of the sale, subject to certain exceptions.

Telia Company has conducted due diligence and background checks of the party in this transaction.

Gazprombank is the third largest bank in Russia and is funding the acquisition with cash in immediately available funds and there is no funding or credit commitments from Telia Company or any other party. The European Union and the U.S. have placed several Russian banks, among them Gazprombank, under sectorial sanctions. Gazprombank is subject to EU capital market sanctions and to Russia US Directive 1 Sanctions. The sanctions are prohibiting US and EU companies from financing, directly or indirectly, entities that are subject to the sanctions. This transaction does not involve any financing of Gazprombank or any trade in stock or other securities issued by Gazprombank and the sanctions are therefore not applicable.

BofA Merrill Lynch, CitiGroup and Morgan Stanley have assisted Telia Company in this transaction where CitiGroup has been the leading bank. White & Case and Houthoff have assisted as legal advisors.

This information is information that Telia Company AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07.00 CET on October 31, 2017.