Facebook Inc (FB)’s Peer, VKontakte, Is Now a Part of Richest Russian’s Portfolio With Significant Plans

September 16th, 2014, would probably hold a lot of significance for Alisher Usmanov, the richest man in Russia and owner of Mail.ru Group since it is on this day that he at last met with success in acquiring VKontakte for $1.47 billion, thus owning the remaining 48% of the total stake. As a result of this deal, Mail.ru now features VKontakte, Russian version of Facebook Inc (NASDAQ:FB), in addition to the already impressive collection of Odnoklassniki, Moi Mir, email service and gaming platform.

Facebook (FB)

This deal is a culmination of year-long effort on part of Mail.ru wherein it has been in a tiff with another shareholder namely United Capital Partners. Owing to it having succeeded, VK founder and CEO Pavel Durov had to tend in his resignation but not before he accused shareholders of conspiring to comply with the opposition as also giving in to Kremlin’s policy of controlling Internet traffic. In spite of everything, subsequent to acquisition, both sides dropped charges against each other and Pavel Durov signed off with the following statement –

“I welcome the decision of my former partners to abandon their claims … For my part I acknowledge the dismissal of claims against UCP and congratulate all parties involved in the settlement.”

Having achieved victory, Mail.ru released the following comment –

“UCP, Mail.Ru and Pavel Durov have agreed that simultaneous with this acquisition all the outstanding litigation, and claims concerning VK and related matters between these parties, will be dropped with immediate effect.”

VK had been launched way back in 2006 by Pavel Durov when Facebook Inc (NASDAQ:FB) was limited within American borders as a way of enabling Russians to keep in touch with their friends and relatives. On his part, it was in 2009 that Usmanov had invested in Facebook Inc (NASDAQ:FB) and accrued handsome gains by disposing off its shares before and during its IPO.

With VK under his belt, it is Usmanov’s intention to challenge Facebook Inc (NASDAQ:FB)’s dominance in the Russian region, a task which is likely to be uphill and arduous given the ability of this global social networking site to conquer hitherto unexplored territory with ease. This ambition is best expressed by analyst Konstantin Belov, UralSib Capital in the following comment –

“The price isn’t low, but it gives Mail.ru domination in Russian social network space and additional opportunities for monetization. This deal is a milestone for Mail.ru as it will finally be able to consolidate Russia’s largest social network on its balance sheet.”

Market response to this acquisition has been positive so far as shares of Mail.ru registered a rise of 4.09% on the London Stock Exchange.

This article has been written by Vinita Basu and edited by Serkan Ünal.

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