The Moscow Amsterdam-listed mobile operator Veon said it would sell its Russian business, Vimpelcom, to senior members of the Vimpelcom management team, led by CEO Aleksander Torbakhov, for 130 billion roubles. Veon operates the Beeline brand through Vimpelcom in Russia, a market that accounts for about half of the group's revenue. Veon also operates Beeline in Kazakhstan and Kyivstar in Ukraine.
Veon, which expects the transaction to be completed by June 1, joins a growing list of Western companies that have sold assets in Russia since Moscow sent tens of thousands of troops into Ukraine on February 24.
Veon said that the management buyout of Vimpelcom resulted in an expected enterprise value of approximately 370 billion roubles. Veon is selling at a discount, but the transaction represents a rare example of money changing hands between parties as companies race to exit Russia.
Japan's Nissan took a $687 million loss when it handed over its business in Russia to a state-owned entity for one euro, a move similar to Renault's decision to sell its majority stake in Russia's Avtovaz for one rouble. Many companies haven't disclosed the price of their divestments.
The agreement allows Veon to benefit from Vimpelcom selling at a higher valuation for a period of 30 months after the deal closes.
Veon's shares increased by 8.6 per cent in thin trade in Amsterdam to 0.57 euro as of 1532 GMT. The shares have traded near record lows since Russia began what it calls its special military operation in Ukraine.
Veon CEO Kaan Terzioglu said in a statement to Reuters that the management buyout of Russian operations will benefit all involved.
Veon's Kazakhstan operations will be transferred to Veon Holdings as part of the transaction and certain inter-company loans will be extinguished, Veon said.
Torbakhov said the deal was an important milestone for Beeline.
The top management team, represented by Svetlana Kirsanova, Maxim Zaikov, Valeriy Shorzhin and Renat Nasretdinov, managed to form the most balanced offer for Veon Group, which ensured its victory in the competitive process on selling the asset, according to Torbakhov.