Analysis: Tele2 exits Russia, pursued by capitalist Kremlin bear
By Douglas Busvine and Maria Kiselyova
MOSCOW (Reuters) - Foreign investors venturing into Russia can - and have - made a lot of money, but doing business with the state tends to work out best for the Kremlin capitalists in the end.
So it went with Nordic telecoms group Tele2 TEL2b.ST, which found its options in Russia narrowed to the point where Chief Executive Mats Granryd and, apparently, its shareholders were grateful to accept the lowest of three offers to sell out.
Denied a fourth-generation license, and with a trade sale hampered for now by a shake-up at state-controlled suitor Rostelecom (RTKM.MM: Quote), VTB bank's (VTBR.MM: Quote) $3.55 billion offer for Tele2's Russian unit at least ensured a clean exit.
Russia has a history of using its state banks as warehouses for strategic transactions, exploiting its home advantage to secure a favorable price before turning a riskless profit by flipping an asset to a strategic buyer.
One source close to the buyer said, however, that anyone expecting a quick resale by VTB could be "in for a surprise".
VTB's privileged status ensured rapid cartel office approval for its purchase, while positioning it to make a good deal even better by pursuing the very strategic options that were denied to Tele2.
Tycoon Mikhail Fridman was linked to two higher bids, one via his A1 investment group for up to $4 billion, and, as a shareholder in Russian mobile rival Vimpelcom VIP.N, through its joint bid of up to $4.25 billion with MTS (MBT.N: Quote).
Tele2 and VTB say those offers were not as favorable as they seemed because they entailed unknown execution risks. And, Tele2 has disclosed, it would get half the upside on any resale within 12 months. Continued...