Lifecell Acquisition Deal Prohibits Payment to Sanctioned Russian Oligarch Fridman

French billionaire Xavier Niel's NJJ Capital to acquire Ukrainian telecoms Lifecell and Datagroup-Volia, overcoming hurdle of sanctioned Russian oligarch Mikhail Fridman's stake in Lifecell's parent company.

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Wojciech Zylm
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Lifecell Acquisition Deal Prohibits Payment to Sanctioned Russian Oligarch Fridman

Lifecell Acquisition Deal Prohibits Payment to Sanctioned Russian Oligarch Fridman

The acquisition and merger of Ukrainian telecom businesses Lifecell and Datagroup-Volia by French billionaire Xavier Niel's investment company NJJ Capital has hit a potential roadblock due to the involvement of sanctioned Russian oligarch Mikhail Fridman. Fridman's company LetterOne indirectly owns a 19.8% stake in Turkcell, the parent company of Lifecell.

Ukraine had previously frozen Fridman's shares in October 2023, citing his support for Russia's invasion. Lifecell appealed the decision, and a Kyiv court recently ruled to cancel the seizure of the shares, paving the way for NJJ to proceed with the acquisition. However, the sale contract strictly prohibits any payment to Fridman or companies under his control, ensuring compliance with international and Ukrainian sanctions.

If the court had denied Lifecell's appeal, the entire $1.5 billion deal, which includes the purchase price and investment over five years, could have fallen through. NJJ has already received regulatory approval from Ukraine's antitrust regulator to acquire Datagroup-Volia, one of Ukraine's largest fixed telecom and pay-TV providers, but is still awaiting approval for the Lifecell acquisition.

Why this matters: The successful completion of this acquisition would represent one of the largest deals in the history of independent Ukraine, consolidating two major players in the country's telecom market. It also highlights the attractiveness of Ukraine's telecom sector to international investors, signaling confidence in the country's economic potential despite the ongoing conflict with Russia.

The proceeds from the sale of Turkcell's assets in Ukraine will likely be used to finance capital expenditures in the company's main market in Türkiye, including the repayment of debt obligations. The Kyiv court's ruling to unfreeze Fridman's shares has eliminated a vital obstacle in the acquisition process, allowing the merger to proceed as planned, subject to regulatory approval.

Key Takeaways

  • French billionaire Xavier Niel's NJJ Capital to acquire Ukrainian telecoms Lifecell and Datagroup-Volia.
  • Acquisition complicated by sanctioned Russian oligarch Mikhail Fridman's 19.8% stake in Lifecell's parent company.
  • Kyiv court ruled to unfreeze Fridman's shares, clearing path for acquisition, subject to regulatory approval.
  • Successful completion would be one of largest deals in independent Ukraine, consolidating major telecom players.
  • Proceeds from sale of Turkcell's Ukrainian assets likely to finance investments in Türkiye market.