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Russia’s Mail.Ru Group buys 48% in VKontakte for $1.47 billion

September 16, 2014, 15:15 UTC+3 MOSCOW
The deal was closed on Tuesday, and the payment was done in cash, including a 22.2 billion ruble loan taken out from Gazprombank for four years under 11.5% annually
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© ITAR-TASS

MOSCOW, September 16./ITAR-TASS/. Russian Internet company Mail.ru Group has acquired 48.01% in domestic social network VKontakte from investment fund United Capital Partners (UCP), controlled by Ilya Shcherbovich, for $1.47 billion, thus consolidating 100% of the project, Mail.Ru Group said in a statement Tuesday.

The shares were purchased from offshore firms Blesmir Development Ltd. and Palagon Ltd., controlled by UCP. The deal was closed on Tuesday, and the payment was done in cash, including a 22.2 billion ruble loan taken out from Gazprombank for four years under 11.5% annually.

Considering the amount of Mail.Ru Group’s first investment in VKontakte in 2007, the value of consolidation of 100% stood at $2.07 billion.

UCP, Mail.Ru Group and VKontakte’s founder and former CEO Pavel Durov agreed to abolish mutual claims. UCP became a co-owner of VKontakte in 2013, when it purchased a 48% stake from Vyacheslav Mirilashvili and Lev Leviyev, partners of Durov. The latter in teamwork with Mail.Ru Group opposed the deal, claiming that as the network’s shareholders they had a preemptive right to purchase the stake.

In its turn, UCP accused Durov of depleting VKontakte’s resources for the development of his own project, messenger Telegram. Durov’s powers as the head of the social network expired in April.

VKontakte’s revenue increased 14% in 2013 to 3.8 billion rubles.

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