Mobile TeleSystems acquires 100% stake in Sistema Telecom

 TeleSystems OJSC (MTS), a provider of mobile communication services, has acquired 100% stake in Sistema Telecom LLC (LLC Sistema Telecommunications, Informatics and Communications), a non-operating subsidiary of JSFC Sistema (AFK Sistema OAO). All the three companies are based in Russia.

Announcement (November 16, 2010):

MTS has signed a non-binding indicative offer to acquire 100% of Sistema Telecom for RUB11,590 million ($374.86 million).

The acquisition includes a 45% stake in TS-Retail, in which MTS currently holds a controlling 55% interest, certain promissory notes previously issued by MTS in the amount of RUB2,000 million ($64.68 million), and property rights in respect of the group of trademarks, including the egg trademarks of MTS, Comstar-UTS and Moscow City Telephone Network (MGTS).

As part of the transaction, MTS will assume debt considerations totaling RUB1,800 million ($58.21 million), which include the settlement of RUB1,350 million ($43.66 million) in debts between MTS subsidiaries and Sistema Telecom.

ING Bank is acting as financial advisor, while Latham & Watkins is acting as legal advisor to MTS.

The transaction is expected to close in the end of 2010.

Deal Value (US$ Million) 374.86

Deal Type                Acquisition

Sub-Category             100% Acquisition

Deal Status              Completed: 2010-12-27

Deal Participants

Target (Company)   OOO Sistema Telecom

Acquirer (Company) Mobile TeleSystems OJSC

Vendor (Company)   AFK Sistema OAO

Deal Rationale

The acquisition will provide MTS full control of its logos and trademarks to ensure that all shareholders benefit equally in its brand's further development.