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UCP offers 48% of VK to Mail.ru, price too high

0 21 March 2014

United Capital Partners (UCP), which currently owns 48% of Russian social network VK.com, has offered to sell its stake to Mail.ru Group, which owns the other 52%. However, the sum they are asking for is reported to be far too high. 

UCP’s ongoing conflict with VK founder Pavel Durov is well known, and it appears that this dysfunctional relationship was the main reason behind Megafon general director Ivan Tavrin’s decision to sell on the 12% stake he bought from Durov after less than 2 months. He described the conflict as “deep rooted, senseless and unproductive” and added that “this isn’t just a corporate conflict, but a problem that affects the development and even the stable existence of the network. The fewer the shareholders, the better for the company, its staff and, ultimately, the product.”

Tavrin’s sale to Mail.ru Group made Alisher Usmanov’s internet holding the majority shareholder in VK, with 52%. It’s well known that Mail.ru would like to take full control of the network, a step which Pavel Durov, who remains the project’s general director, seems to support. When Mail.ru bought Tavrin’s stake this week he described it as a “positive step”. 

However, despite making Mail.ru an offer, UCP are in no rush to sell. Viktoriya Lazareva, a partner at UCP told Vedomosti that “we are in no hurry - VK has plenty of room for development and growth.” However, she admitted that as a “financial investor” UCP will always consider “a good offer”. 

At present though it seems that Mail.ru Group and UCP have a different idea of what a ‘good offer’ looks like. It is reported that UCP wants to receive both cash and shares in Mail.ru Group in exchange for its 48% stake, and that it wants the Mail.ru shares to be insured - meaning that Mail.ru must buy them back if their value falls below a fixed sum. 

An inside source told Vedomosti that the UCP’s current offer is “two times higher than could be considered fair”, meaning that a lot of negotiations will be required before some kind of middle ground is reached. While Mail.ru Group is probably ready to pay a premium for the shares, allowing UCP to get a better return than they would if they held out for an IPO, its worth remembering that Alisher Usmanov’s faith in internet projects seems to be fading - he just sold all his shares in Facebook. This means he is unlikely to accept a price that significantly overvalues UCP’s stake. 

It seems like this conflict is going to go on and on. 

Source: Vedomosti

Top image via Shutterstock

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