AFK "Sistema" buys NVision for $200 million and an action

AFK Sistema, JSC RTI and "Management company of the NVision Group signed the framework agreement regulating the principles of future relationship of the parties and determining terms of transaction by strategic integration of assets of JSC RTI and Nvision Group Ltd, said in the official statement of the parties.

According to the reached agreements, JSC RTI will purchase 50% of stocks of the company at shareholders of Nvision Group Ltd. Besides, shareholders of Nvision Group Ltd will exchange the remained 50% of shares of the company for stocks of JSC RTI of additional release. As a result of the transaction shareholders of Nvision Group Ltd will receive up to $200 million in cash and will become owners of an essential share in authorized capital of JSC RTI, having received considerable board representation of JSC RTI and an opportunity to influence its key solutions. 

Let's remind that earlier plans about purchase of NVision were made by Rostelecom: the operator concluded the purchase option of 25% of stocks of NVision in 2009. Expected transaction amount had to be no more than $50 million. Purchase dragged on, but the parties to the last confirmed interest in the transaction, it did not become known of its canceling yet. It occurred in the fall of 2011.

Rostelecom did not begin to buy NVision Group, and as a result System which already has other large integrator "Sitronics IT" got the company. Mikhail Shamolin considers that the transaction will allow to achieve "industry synergy", and actually in the market of system integration one more mega-player can appear 

Major shareholders of JSC RTI are AFK "Sistema" (84.6%) and JSC Bank of Moscow (15.4%). JSC RTI Sistemy Concern (97%) and JSC Sitronics (63.074%) is a part of JSC RTI. As for owners of NVision, 49% of papers of the company Troman holdings limited, on 22.3% - to Anton Sushkevich and Dmitry Taraba belongs, Alexey Glotov has another 5.5% and Anatoly Goncharov has 1%.

The president of AFK "Sistema" Mikhail Shamolin said that "integration of the hi-tech assets of AFK "Sistema" consolidated based on JSC RTI with assets of NVision Group as leading industry partner will lead to growth of shareholder value of the company and will create obvious advantages in terms of expansion of scales of business and achievement of industry synergy".

Anton Sushkevich hoped that the expected transaction and the subsequent integration "will fully allow to use complementary market and technology competences of the parties".

The transaction will be closed after accomplishment of a number of conditions: it is necessary to get approval according to corporate procedures of the parties of the transaction, to get all necessary permissions of the state regulating authorities and also to sign a number of the agreements connected with the transaction.

As Alexander Semyonov commented on TAdviser, the CEO of CORUS Consulting group, in the Russian IT market really is a tendency to consolidation: there are really large players, the market becomes more mature. "The service model of rendering services which successful implementation requires not only the technology platform and resources, but also the developed solutions and also experience of rendering technical support is interesting to large players today. The companies which can provide similar services at the high level will show interest from larger structures", - he noted.

As for IT market in general, he will only benefit from similar merges, Alexander Semyonov considers: "We still have no really large companies – on 40-50 thousand employees what are in the West", - the top manager reminded.