Alfa Group offers USD2.8bn for 13.76% Turkcell stake

Russian conglomerate Alfa Group has bid USD2.8 billion for a disputed 13.76% stake in Turkish mobile operator Turkcell, in a move which is likely to reignite the long-running shareholder feud between Alfa and Turkey’s Cukurova Holding. According to Reuters, Alfa has offered USD54.9 million per share for 51 of Turkcell’s Class B shares, which are currently being held by state-run Ziraat Bank as collateral for a loan. On 31 July 2014 Cukurova was permitted to recover the contested stake for USD1.56 billion (see below), with the deal funded by a loan from Ziraat.

According to TeleGeography’s GlobalComms Database, Russia’s Altimo, the telecoms investment arm of oligarch Mikhail Fridman’s Alfa Group, initially appropriated the stake when Cukurova defaulted on a USD1.35 billion loan in July 2011. In July 2013 the UK’s Privy Council decided that Cukurova must pay USD1.56 billion to recover the stake. TeleGeography notes that the USD2.8 billion bid represents a significant premium on the USD1.56 billion price previously attached to the stake.

As at 12 August 2014 (most recent official company data) Turkcell was majority-owned by Turkcell Holding (51.00%), which is itself owned by Sweden’s TeliaSonera (47.09%, giving it a 37.09% overall stake in Turkcell) and Cukurova Holding (52.91%, representing a 26.98% overall stake). Cukurova Holding is majority controlled by the Turkish Cukurova Group (51%, or a 13.76% overall stake in Turkcell), with 18.5% held by Alfa Group (4.99% overall stake in Turkcell). The remaining 34.93% of shares are publicly traded on the New York Stock Exchange (NYSE) and Istanbul Menkul Kiymetler Borsasi (IMKB).