Government approves Rostelecom appraisal ahead of Svyazinvest merger

Russia’s property and communications ministries have reportedly approved Ernst & Young’s appraisal of Rostelecom for the purpose of merging the latter with Svyazinvest, local press reports have indicated. The valuation was agreed at RUB136 (USD4.44) per share, which represents a 9% premium to the current market price, and should therefore allow the government to maintain control in Rostelecom after the merger is completed. The consolidation of Svyazinvest into Rostelecom was originally planned for March 2012 but it is now twelve months behind schedule and is not likely be completed until October 2013 at the earliest. Going forward, the next key step is likely to be an announcement of buyout prices for those Rostelecom minorities who will not vote in favour of the deal; these prices will be derived from separate valuations.