Mobile TeleSystems (MTS) announced that its board of directors has approved the acquisition by MTS subsidiaries of a 100 percent stake in Sistema Inventure which directly owns 29 percent of the voting stock of Moscow City Telephone Network (MGTS). Under the proposed terms, subsidiaries of MTS would acquire for RUB 10.56 billion a 100 percent stake in wholly owned Sistema's subsidiary Sistema Inventure, which in addition to its stake in MGTS has RUB 10.44 billion of debt owed to Sistema. Upon completion of the transaction, MTS' ownership stake in MGTS would rise to 99.1 percent of ordinary shares and 69.7 percent of preferred shares, which total 94.1 percent of MGTS charter capital. Approval of the transaction by the MTS board of directors follows the recommendation of the Special Committee of three independent directors overseeing the transaction process. Citigroup Global Markets is acting as financial advisor and has provided a fairness opinion to the Special Committee. Cleary Gottlieb Steen & Hamilton is acting as legal advisor to the Special Committee. Tax and financial due diligence was conducted by Ernst & Young. The deal is still to be approved by Sistema's board of directors. The acquisition has already been approved by the Federal Antimonopoly Service (FAS). The transaction is subject to documentation and is expected to be completed by the end of the year.
