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Russia's MegaFon could pay $1.33-billion for cellphone retailer

Russian mobile phone company MegaFon is expected to raise around $2-billion from its share sale in London and Moscow in coming weeks.

PAUL HACKETT/Reuters

Russian mobile phone company MegaFon, preparing for a stock market listing in London, said on Monday it could pay up to around £828-million pounds ($1.33-billion U.S.) to buy half of the country's leading cellphone retailer Euroset.

The deal would give MegaFon more shops through which to sell its products and services in Russia's highly competitive mobile market. Euroset has 5,500 stores in Russia and Belarus. MegaFon runs 1,750 of its own stores and 2,000 franchisee shops, according to VTB analysts.

MegaFon approved plans for the purchase last month.

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MegaFon's rival Vimpelcom, Russia's third-largest mobile firm, will hold the other 50-per-cent stake in Euroset.

Under the deal, MegaFon plans to buy 25 per cent of Euroset for up to $590-million from tycoon Alexander Mamut, who has been looking to sell his holdings since last December.

At the same time, MegaFon's main shareholder, Alisher Usmanov's Garsdale company, will buy another 25 per cent from Mr. Mamut, for an unspecified sum.

Garsdale will later sell that stake to MegaFon, with the latter ending up paying in total up to $1.33-billion for the 50-per-cent stake, MegaFon said on its website.

It is subject to approval by MegaFon's shareholders at a Nov. 6 meeting.

MegaFon is expected to raise around $2-billion from its share sale in London and Moscow in coming weeks. The listing could be the biggest by a Russian company since that of internet firm Yandex last year.

The Euroset deal has been flagged to potential investors in MegaFon's share sale by the investment banks running the process.

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