Russia’s Gazprom is gaining control of VK Company, the LSE-listed Russian Internet major (previously known as Mail.ru Group), as a result of a string of deals to buy out Russian billionaire Alisher Usmanov from the company.
These transactions will increase state control over the group, which owns in particular the country’s leading social networks Vkontakte and OK.
Via its subsidiary Megafon, Usmanov’s holding USM is selling to Sogaz 45% of the shares of MF Technologies, which owns 57.3% of the voting shares of VK. Sogaz, Russia’s largest insurance company, is a subsidiary of Gazprom. Key allies and friends of Russian President Vladimir Putin, including Yuri Kovalchuk, are among its other major shareholders.
The terms of the deal were not disclosed but Alexei Miller, who is board chairman at Sogaz and Gazprom CEO, said it is “carried out at market terms.” Whether the deal was actually completed or just planned is not fully clear, as the companies involved did not fully align their communications.
Another 9% of MF Technologies belongs to USM directly, but this package is now “in a deal with Gazprombank,” an USM representative said today.
The remaining 10% stake is owned by Rostec, the state military tech corporation headed by Putin’s close ally Sergey Chemezov.
Gazprombank already owned 36% of MF Technologies, which it bought from Sber, the state-controlled financial and digital giant, just a week ago.
In total, Gazprombank and Sogaz, will now own 45% each of MF Technologies and control more than 50% of the voting rights in VK. Gazprombank announced today the transfer of its shares to its subsidiary Gazprom Media — which said VK will remain an “independent company.”
New Kremlin-connected CEO
VK’s CEO Boris Dobrodeev — who is widely seen as an Usmanov ally — also announced today he will step down from the position following the shareholder shakeup. He will stay in post until a new CEO will be appointed.
Dobrodeev is likely to be replaced by Vladimir Kirienko, currently a Vice President of sate-controlled telecom company Rostelecom. He is the son of Sergey Kirienko, the chief of Russia’s Presidential Administration.
The reasons for this shareholder rehaul are not fully clear yet. While business reasons are not ruled out — USM said it wanted to focus more on telecoms, metals and mining — these deals are taking place as the Russian government is tightening its grip on the country’s digital sphere, in particular social media. (This being said, Usmanov’s previous ownership could in no way be seen as factor of Mail.ru Group’s independence from the Kremlin.)
Telegram channel Nezygar — which is believed to express views of Kremlin insiders — sees in the deal “a tectonic shift in Russian politics.” The group, “passed into the media category a long time ago, which required to change some management practices and ‘lifestyle’ at the ownership level.”
Moreover, “while VK belonged to representatives of one Russian clan, it has become a concession of several ones,” notes Nezygar. “As a result of the transaction, some have become richer, and some have become stronger. But in today’s Russia, it is much more important to be strong than rich.”
Sources: Nezygar, Reuters, The Bell (1, 2), The Moscow Times, VK
