Veon said it has agreed to sell Veon Armenia, its operating subsidiary in Armenia working under the Beeline Armenia brand, to Team LLC for USD 51 million. The sale is expected to close shortly. The value of the transaction equates to an EV/EBITDA multiple of 2.9x based on 2019 reported EBITDA.
Veon said the sale was in line with its plans to simplify the group’s structure and to focus on markets with attractive long-term growth opportunities. The company has been in talks for several months on the Armenian deal, after earlier trying to sell the business to rival Ucom. Team is a company started by former executives of Ucom.
The company Team issued a statement saying that a new big family will be formed from employees of Team and Veon Armenia. The two brothers Ayk Esayan and Alexander Esayan, minority shareholders and former managers of Ucom, left that company and founded the telecommunications operator Team earlier this year. On 08 June, Team applied to the national watchdogs for clearing the Beeline acquisition and approval was granted on 10 July.
Team plans to use bank loans for the acquisition. The company concluded an agreement with Armenian bank Ardshinbank, and shares of Veon Armenia will be pledged to the bank under the agreement.
Ucom carried out negotiations with Veon on the acquisition of Beeline Armenia from the end of 2019 and submitted an application to regulators in December 2019. The negotiations were suspended later due to disagreements between the Esayan brothers with other shareholders of Ucom.
Ayk Esayan and Alexander Esayan own a 6 percent stake in Ucom. They submitted a proposal to majority shareholders of Ucom to acquire their stake for around AMD 34 billion. The other shareholders rejected the proposal, and the Esayan brothers left Ucom in April. More than 800 employees decided to join them and leave the company.
The company AlNet was founded by the Esayan brothers later, and the company name was changed to Team afterwards. Team was awarded a licence for providing telecommunications services.
In July, Ucom issued a statement saying the merger should be rejected on several grounds. Ucom noted that the actions taken by Team and its management should be qualified as unfair competition, as they drew on confidential information from Ucom.
Ucom claimed that Hayk Yesayan, the former CEO at Ucom, as well as Alexander Yesayan, the former deputy CEO and acting member of the management board of Ucom, breached their fiduciary duty towards Ucom. The company said when negotiating the deal with Beeline Armenia and presenting the signed memorandum to the watchdog, they used confidential information, including details of earlier negotiations between Ucom and Beeline Armenia.
Ucom claimed that as a result of the use of its confidential information by the Yesayans, Team was able to negotiate and sign a memorandum within just a month, while similar deals usually take several months, if not longer.
In September, the Yerevan general court removed the restrictions surrounding the acquisition of Veon Armenia by Team. Temporary restrictions were imposed based on claims from Ucom.
Veon Armenia provides both mobile and fixed services under the Beeline Armenia brand. Mobile subscriber base of the operator totaled 1 million at the end of 2018, and the EBITDA of the company was AMD 8.49 billion in 2019.
