Skadden Arps, Akin Gump, Fried Frank, and Hogan Lovells played various roles in United Capital Partners’ sale of a 48 per cent stake in social media site VK.Com Limited (the holding company of VKontakte.Ru, Russia’s largest social online networking service, known as “Russia’s Facebook”) to Mail.Ru Group Limited.
Mail.Ru first bought a stake in VK.com in 2007. Subsequent acquisitions — including the 12% share owned by VK.com founder Pavel Durov (through his company Bullion Development) — allowed Mail.Ru to accumulate a 52% stake in the company. The sale, which was completed on September 16, 2014, thus now gives Mail.Ru 100% ownership of VK.com.
According to a Mail.Ru statement, “taking into account the price paid for the other 52% of VK since the first investment in 2007 this makes the total acquisition cost of VK USD 2.07 billion. Mail.ru funded the deal with its existing cash and with a RUB 22.2 billion (USD 585 million at CBR rate) 11.5% fixed rate 4 year loan from Gazprombank.”
The transaction also brings to an end litigation and arbitration between the companies involving the ownership of the “Telegram” secure messaging app developed by Durov, and according to that same Mail.Ru statement, “claims concerning VK and related matters between these parties will be dropped with immediate effect.”
In 2013 VK had revenue growth of 14% to RUB 3.8 billion with EBITDA growth of 32% to RUB 1 billion and net profit of RUB 53 million. In the first half of this year VK had revenues of RUB 2 billion with EBITDA of RUB 694 million and net income of RUB 248 million.
The formal Mail.Ru statement about the transaction included comments from all three parties to the deal and litigation. Dmitry Grishin, the Co-Founder and CEO of Mail.Ru Group, said that: “We are happy to announce the acquisition of 48,01% of VKontakte stake from UCP. The consolidation of 100% of VK and the termination of all outstanding shareholder disputes will allow focus on the product and its further development. We respect the successful results driven by VK’s team and do not plan any significant changes in the team or the product itself. Moreover, we are ready to give the current team an opportunity to realize their plans and initiatives.” The Lawyer reports that Akin Gump Partner Artem Faekov led the team advising USM Holdings, the majority owner of Mail.Ru, and Hogan Lovells’s representation of Mail.Ru in the litigation was led by Partner Kieron O’Callaghan and Associate Ben Hornan.
Victoria Lazareva, Partner of UCP, said: “We are satisfied with the transaction and confirm full settlement and release of the mutual claims between the parties. We wish further successful growth for the business of VK.” Skadden has confirmed that its representation of UCP was led by Partners Lorenzo Corte and Dmitri Kovalenko and Counsel Lisa Giroux, as well as Litigation Partners David Kavanagh, Tim Nelson, Lea Haber Kuckk, and Patrick Heneghan and Counsels David Edwards and Gregory Litt.
And Pavel Durov stated that: “I welcome the decision of my former partners to abandon their claims toward Telegram and to transfer the American entities under my control. For my part I acknowledge the dismissal of claims against UCP and congratulate all parties involved in the settlement.” The Lawyer reports that Durov’s company — Bullion — was represented in the London Court of International Arbitration by Quinn Emanuel Partners Sue Prevezer and Alex Gerbi, and Durov was advised by Fried Frank’s London-based Litigation Partner Justin Michaelson, who was assisted by Partners Richard May and David Morris and Associates Shivani Sanghi, James West, and Justin Santolli.