OREANDA-NEWS. On August 05, 2009 Sistema (LSE: SSA), the largest diversified public financial corporation in Russia and the CIS, which invests in and is a major shareholder of large companies operating in different industries, announced that its Board of Directors has agreed to the acquisition of Sistema’s 50.91% stake in Comstar-UTS by Mobile TeleSystems (“MTS”), another subsidiary of Sistema, for US 1.272 billion* or US 5.98 per ordinary share** in cash, reported the press-centre of Sistema.

Credit Suisse and Merrill Lynch acted as financial advisors to Sistema. Merrill Lynch also provided a fairness opinion to the Board of Directors of Sistema.
 
The Board of Directors has also set October 1, 2009 as the date for the Extraordinary General Meeting of Sistema’s Shareholders (“EGM”), in order to vote on the proposed transaction. The Board of Directors’ approval of the offer does not constitute a binding agreement to consummate the transaction, and is subject to approval by the EGM. The completion of the transaction, which is expected to take place at the end of October 2009, is also contingent upon the fulfillment of a number of conditions, including MTS obtaining the required funding.
 
Leonid Melamed, President and Chief Executive Officer of Sistema, commented: “This transaction is in line with our stated strategy which is focused on further development of our telecommunications assets portfolio and the creation of additional shareholder value in both telecommucations subsidiaries and Sistema itself, as well as increasing return on its invested capital. The deal will allow us to strengthen our leadership position in the Russian telecommunications sector and realise the synergies in both companies, whilst we optimise the ownership and management structures in our key telecom subsidiaries.”
 
*As transactions between two Russian entities must be carried out in rubles, MTS will hedge the final amount due on completion of the transaction with 50% of the sale price pegged at 31.9349 rubles:dollar rate, while the balance will be calculated at the official rate of the Central Bank of Russia on the date of completion.

** 1 ordinary share is equal to 1 GDR (Global Depositary Receipt).