TeliaSonera Turkcell deal founders at last minute

Cukurova CEO changes mind on selling stock

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Anders Igel, CEO of TeliaSonera, spent a painful day in Istanbul on Monday, when the Turkish company Cukurova decided at the last minute to back out of an agreement to sell a package of shares in the Turkish mobile telephone operator Turkcell to the Swedish-Finnish telecommunications service provider.
      Igel had arrived in Turkey on Sunday to get the signature of Cukurova onto a final bill of sale, under which TeliaSonera would have bought a 27% holding of TeliaSonera stock from Cukurova.
      "We had agreed on a time and a place for the signature, but Cukurova never showed up. We spoke by telephone, and they said that they do not want to sign. We were offered no explanation", said Igel by telephone from Istanbul on Monday.
     
In March, TeliaSonera announced a deal under which the company’s holding in the successful Turkish operator would have risen to 64.3 percent.
      After the deal foundered, TeliaSonera announced that it would take Cukurova to court. Igel planned to stay in Istanbul at least until Tuesday.
      "We are still committed to the deal as agreed. Now we just have to wait and see what happens", he says.
     
Cukurova issued a statement to the Istanbul Stock Exchange in which it says that the company had changed its mind because of conditions set by TeliaSonera.
      TeliaSonera had applied for special permission not to be required make an offer for the remaining shares of Turkcell - something that is normally required by Turkish law.
      In its statement, Cukurova suggests that the request for special treatment has raised bad blood in Turkey, and that Cukurova had been asked to cancel its plans to sell the shares to TeliaSonera.
      Igel says that Cukurova had approved the conditions in March, and that after that it had not called for any significant changes in the details of the agreement. Therefore, the sudden cancellation of the deal came as a surprise to TeliaSonera.
      Cukurova also said that it wants to keep Turkcell in Turkish hands.
      "Then why did the agree to the agreement in the first place?" Igel wonders.
     
It was widely suspected in Turkey that the real reason for the move by the heavily indebted Cukurova was to get a better price for the shares. Under the deal, TeliaSonera was to have paid about EUR 2.4 billion, which is significantly above the market price.
      "Another possibility has been considered - that Cukurova might still be considering the offer by the Russian Alfa Group, even though it was not originally taken seriously", said one Turkish analyst by telephone from Istanbul.
     
Earlier this year Alfa Group said that it could offer a higher price for the Turkcell shares than what TeliaSonera offered. However, it did not give a specific price.
      The offer by Alfa Group was originally seen as "mischief", linked with disputes between TeliaSonera and the Russian group over ownership of the Russian operator Megafon.
      Igel did not want to say if TeliaSonera would still want to raise its offer for the shares. However, he said that he is ready to discuss the details of the contract with Cukurova.


Previously in HS International Edition:
  Russian Alfa Telecom outbids TeliaSonera for stake in Turkcell (1.4.2005)
  TeliaSonera gets majority holding in Turkish operator Turkcell (29.3.2005)
  Over EUR 1 billion in state-owned shares of TeliaSonera to be sold off (9.12.2004)

Helsingin Sanomat