MegaFon is set to take a majority stake in Russia-based internet company Mail.Ru as it looks to access higher spending digital subscribers.
The operator is spending $740 million to acquire 63.8 percent of the voting rights in Mail.Ru from three subsidiaries of USM Holdings, which itself is MegaFon’s largest shareholder.
Mail.Ru owns an e-mail service, an internet portal, social networks VKontakte (VK) and Odnoklassniki (OK), an instant messaging service and an online games business.
MegaFon plans to launch a mobile offering for VK, which has 90 million active monthly users. OK has 43.6 million active daily users and will get what the Russian operator called "a special offering".
A further 35.6 million people use Mail.Ru’s email service daily, while 49.1 million use its portal monthly, offering the two companies the chance to work together on areas such as advertising.MegaFon itself has 77.3 million subscribers.
The deal is expected to be waved through at an Extraordinary General Meeting on 20 January.
Russian anti-trust authorities must also approve the deal.
The two companies will operate as separate entities, dealing on “an arms-length basis” should it go ahead.
Sergey Soldatenkov, CEO at MegaFon, said: “We are excited to announce an opportunity to acquire a controlling stake in Mail.Ru Group, a transaction which allows MegaFon to make the next step in realisation of its digital strategy.
“Closer ties with Mail.Ru Group will allow us to execute common strategic projects, including, but not limited to, the creation and promotion of special offerings to digital subscribers of VKmobile based on the social network VK, and improvements in clients targeting and segmentation.
“In cooperation with Mail.Ru Group MegaFon would be able to provide a premium and differentiated offering to its digital subscribers, creating value for the shareholders of both companies.”