Canada's Globalive buys Vimpelcom's Wind Mobile stake

Tue Sep 16, 2014 3:00am EDT
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By Alastair Sharp

TORONTO, Sept 16 (Reuters) - The investment company of Wind Mobile's founder confirmed it would buy Vimpelcom Ltd's majority stake in the young Canadian wireless company, promising a fresh boost of capital as it seeks to cement its place as a major national player.

The deal, subject to regulatory approval, includes the purchase of Vimpelcom's direct and indirect debt and equity interests in Wind, Globalive Capital said on Tuesday.

The company, the investment vehicle of Wind Mobile founder and chairman Anthony Lacavera, did not disclose a deal price, but two sources with knowledge of the matter said on Monday that the price tag was around C$300 million ($272 million).

At that price, the deal sharply discounts well over $1 billion plunged into Wind since 2008, suggesting rival bids were difficult to come by amid federal government opposition to established domestic operators gobbling up struggling new entrants.

Vimpelcom holds 65 percent of Wind's equity but only one third of voting shares - an arrangement originally put in place to comply with restrictions on foreign control of Canadian telecom companies - as well as most of its debt. The rules have since been loosened for small operators.

The deal was partly funded by a consortium of investors including West Face Capital, Tennenbaum Capital Partners, LG Capital Investors, Serruya Private Equity, and Novus Wireless Communications, Globalive said.

"With stable, long-term ownership and secure financing, Wind Mobile is moving into an exciting new phase," Lacavera said in the statement, adding that Wind had 750,000 subscribers, up from more than 735,000 in June.

Canaccord Genuity analyst Dvai Ghose was dubious, however, that the reported deal would mean a sharp increase in investment or that Wind would be able to more seriously compete with Canada's three dominant national wireless companies, which together control some 90 percent of the market.   Continued...