EQS-News: PJSC MegaFon: Alibaba Group, MegaFon, Mail.ru Group and RDIF Announce Signing of Definitive Documents for Joint Venture in Russia and the CIS

EquityStory.RS, LLC-News: PJSC MegaFon / Key word(s): Joint 
Venture/Agreement 
PJSC MegaFon: Alibaba Group, MegaFon, Mail.ru Group and RDIF Announce 
Signing of Definitive Documents for Joint Venture in Russia and the CIS 
 
2019-06-05 / 19:31 MSK 
The issuer is solely responsible for the content of this announcement. 
 
*Alibaba Group, MegaFon, Mail.ru Group and RDIF Announce Signing of 
Definitive Documents for Joint Venture in Russia and the CIS* 
 
*Moscow, Russian Federation (June 5, 2019)* - Alibaba Group (NYSE: BABA), a 
global digital commerce company, PJSC "MegaFon" (MoEx: MFON), a pan-Russian 
operator of digital opportunities, Mail.ru Group (MAIL.LI), the leading 
internet and IT company in Russia, and Russian Direct Investment Fund 
(RDIF), Russia's sovereign wealth fund, have received approval from the 
Federal Antimonopoly Service (FAS) in Russia for a joint venture to 
integrate Russia's key consumer internet and e-commerce platforms and launch 
a leading social commerce joint venture in Russia and the CIS, which will 
operate in compliance with local data protection regulations. 
 
As announced in September 2018, the parties agreed to establish a joint 
venture (the AliExpress Russia JV) on the basis of the existing e-commerce 
business of AliExpress Russia and the strength of Mail.ru Group's social and 
digital businesses. The parties have been working closely together to agree 
the definitive agreements relating to the AliExpress Russia JV based on the 
key principles set forth in the Framework Agreement signed in Vladivostok by 
all shareholders in September 2018. 
 
The AliExpress Russia JV will be majority owned by Russian shareholders, 
overseen by a Board of Directors with representation from RDIF, Alibaba, 
MegaFon and Mail.ru Group, and managed by two Co-CEOs, one of whom will be 
nominated by Alibaba Group and the other by Mail.ru Group. 
 
The AliExpress Russia JV creates an unmatched value proposition for 
merchants, consumers and internet users across Russia and the CIS, and 
accelerates the development of Russia and the region's growing digital 
economy by leveraging and integrating the strength and expertise of the new 
shareholder group. As part of the shareholder collaboration, the AliExpress 
Russia JV and Mail.ru Group will enter into a strategic cooperation 
agreement relating to, among other things, traffic and product initiatives. 
As part of this social commerce cooperation, the AliExpress Russia JV will 
promote its services on Mail.ru Group's platforms through exclusive product 
integration and marketing solutions. 
 
*Daniel Zhang, CEO of Alibaba Group*, commented: 
 
"This partnership will enable the AliExpress Russia JV to accelerate the 
development of the digital consumer economy of Russia and CIS countries in 
ways that no one party could accomplish alone. Together, we are uniquely 
positioned to offer consumers in Russia and neighbouring countries an 
innovative shopping experience by combining social platforms with commerce, 
as well as enabling regional brands and SMEs to sell their products locally 
and globally. Alibaba's mission is to make it easy to do business anywhere. 
This JV is an important part of Alibaba's international expansion and step 
toward our goal of supporting 10 million small businesses reach 
profitability and serving 2 billion consumers around the world." 
 
*Gevork Vermishyan, CEO of MegaFon, *commented: 
 
"MegaFon is pleased to enter into this partnership with global technology 
leaders Alibaba Group, RDIF and Mail.Ru Group. This agreement is in line 
with our digital strategy of 'driving digital world' aimed at creating new 
opportunities for over 76 million customers. E-commerce is a perfect fit for 
our rapidly developing ecosystem of partnerships to furnish best-in-class 
financial services, media, and other consumer offerings. This combination is 
beneficial for all parties, providing unparalleled access to the Russian 
consumer base." 
 
*Boris Dobrodeev, CEO of Mail.ru Group*, commented: 
 
"Mail.ru Group is looking forward to leveraging the synergies within a 
leading social commerce joint venture in Russia and CIS countries. 
AliExpress Russia JV will become an undisputed leader in Russian e-commerce 
and create an unparalleled social commerce offering for our users. This 
partnership is in line with our strategy of bringing together people and 
businesses, as we will offer customers richer social experience and provide 
entrepreneurs with a platform for growth. We hope that the successful 
realization of the deal will strengthen our cooperation with local and 
global technology leaders. This is a major milestone for the Russian 
e-commerce market, and we believe it will promote the development of the 
digital economy". 
 
*Kirill Dmitriev, CEO of the Russian Direct Investment Fund (RDIF),* noted: 
 
"This landmark partnership will bring both significant benefits to customers 
and create unprecedented opportunities for services growth. RDIF continues 
to support the acceleration of the digital transformation of the Russian 
economy through the expansion of the e-commerce market. Bringing together 
the expertise of the companies at the forefront of social commerce and 
global retail opens a new era for the Russian market." 
 
Each shareholder has agreed to make certain contributions to the AliExpress 
Russia JV including the following: 
 
- *Alibaba Group* will invest $100 million and contribute AliExpress Russia 
into the joint venture. This consists of Alibaba Group's current 
Russia-based domestic and cross-border operations of the global retail 
marketplace business of AliExpress. 
 
- *MegaFon* will sell its 9.97% economic stake in Mail.ru Group to Alibaba 
Group in exchange for a 24.3% stake in the AliExpress Russia JV with 30.2% 
voting rights[*]. 
 
- *Mail.ru Group* will contribute its Pandao e-commerce business and cash 
investments of $182 million in exchange for a 15% stake in the AliExpress 
Russia JV with 18.7% voting rights. 
 
- *RDIF *will invest $100 million into the AliExpress Russia JV and may 
further acquire additional shares of the joint venture from Alibaba Group 
for $194 million. Upon the exercise of the option to purchase the additional 
shares in the AliExpress Russia JV, the RDIF will own economic and voting 
stakes in the joint venture of 12.9% and 9.6%, respectively. 
 
Details of the economic and voting interests of all shareholders in the 
AliExpress Russia JV are illustrated below: 
 
         *At Closing*       *With RDIF Call OptionExercised*(1) 
         *Economic *Voting      * Economic          *Voting 
          Rights*  Rights *      Rights*           Rights * 
Alibaba 
 Group     55.7%    49.9%         47.8%              47.6% 
MegaFon  24.3%     30.2%    24.3%              26.4% 
Mail.ru 
Group    15.0%     18.7%    15.0%              16.3% 
RDIF       5.0%      1.2%         12.9%              9.6% 
*Total*  *100.0%*  *100.0%*      *100.0%*          *100.0%* 
 
Note (1): In addition, RDIF may enter into an option agreement to purchase 
up to 4.0% of the AliExpress Russia JV common equity from MegaFon. 
*** 
 
*Notes to editors:* 
 
*Russian Direct Investment Fund (RDIF)* is Russia's sovereign wealth fund 
established in 2011 to make equity co-investments, primarily in Russia, 
alongside reputable international financial and strategic investors. RDIF 
acts as a catalyst for direct investment in the Russian economy. RDIF's 
management company is based in Moscow. Currently, RDIF has experience of the 
successful joint implementation of more than 70 projects with foreign 
partners totalling more than RUB 1.5tn and covering 95% of the regions of 
the Russian Federation. RDIF portfolio companies employ more than 800,000 
people and generate revenues which equate to more than 6% of Russia's GDP. 
RDIF established joint strategic partnerships with leading international 
co-investors from more than 15 countries that total more than $40bn. Further 
information can be found at www.rdif.ru [1] 
 
*Alibaba Group*'s mission is to make it easy to do business anywhere and the 
company aims to achieve sustainable growth for 102 years. 
 
Launched in 2010, AliExpress (www.aliexpress.com) is a global retail 
marketplace that enables consumers from around the world to buy directly 
from manufacturers and distributors primarily in China and is dedicated to 
becoming a platform for worldwide merchants to sell locally and globally. 
AliExpress operates in multiple local languages including English, Russian, 
Portuguese, Spanish and French. 
 
*MegaFon PJSC* is a pan-Russian operator of digital opportunities, operating 
in all segments of the telecommunications markets in Russia, and in the 
Republics of Abkhazia, South Ossetia and Tajikistan. MegaFon is a recognised 
leader on the telecommunications market in Russia, The company traditionally 
pays special attention to quality of communications and offers its customers 
the highest speed of Internet access. We are holding the award for "The 
Fastest Mobile Communication Network in Russia" from Ookla. MegaFon was the 
first operator in Russia to launch the commercial operation of a third 
generation (3G) network in 2008. Already back in 2012, we were the first in 
Russia to launch 4G LTE, and from February 2014, we launched the 
first-on-the-globe LTE-Advanced commercial network and increased data 
transmission speed up to 300 Mbps. In 2017, we were among the first 
worldwide to launch commercial operation of Gigabit LTE network and 
demonstrated the speed of 979 Mbps. Today, MegaFon has the largest network 
of base stations in Russia. MegaFon provides services to over 76.9 mln. 
subscribers. 
 
*Mail.ru Group*, international brand My.com (MAIL.LI, listed since November 
5, 2010) is the largest internet business in Russia in terms of total daily 
audience (Mediascope Web Index Desktop+Mobile, Russia, population aged 12-64 
in the cities 100,000+, February 2019). 
 
Mail.ru Group is developing an integrated communications and entertainment 
platform. The Company owns Russia's leading email service and one of 
Russia's largest internet portals, Mail.Ru; the two largest Russian language 
social networks, VKontakte (VK) and Odnoklassniki (OK); Russia's largest MMO 
games, such as Warface, Skyforge and Perfect World, and global mobile games, 
such as War Robots and Hustle Castle; and instant messaging services ICQ, 
Agent Mail.ru and TamTam. The Company operates two largest food delivery 
businesses in Russia, Delivery Club and ZakaZaka, and a location-based 
mobile marketplace Youla. 
 
The Company owns Pixonic, a mobile games developer, and ESforce, one of the 
largest eSports businesses globally. The Company's portfolio also includes a 
leading OpenStreetMap-based offline mobile maps and navigation service 
MAPS.ME and a controlling stake in GeekBrains, an online education platform 
for developers. In addition, Mail.ru Group holds equity stakes in a number 
of small venture capital investments in various Internet companies in 
Russia, other CIS countries and Israel. 
 
*Disclaimers, statement regarding inside information and forward looking 
statements* 
 
Certain statements and/or other information included in this document may 
not be historical facts and may constitute "forward looking statements" 
within the meaning of Section 27A of the U.S. Securities Act of 1933 and 
Section 2(1)(e) of the U.S. Securities Exchange Act of 1934, as amended. The 
words "believe", "expect", "anticipate", "intend", "estimate", "plans", 
"forecast", "project", "will", "may", "should" and similar expressions may 
identify forward looking statements but are not the exclusive means of 
identifying such statements. Forward looking statements include statements 
concerning plans, expectations, projections, objectives, targets, goals, 
strategies, future events, future revenues, operations or performance, 
capital expenditures, financing needs, plans or intentions relating to the 
expansion or contraction of business as well as specific acquisitions and 
dispositions, competitive strengths and weaknesses, the risks face in 
business and response to them, plans or goals relating to forecasted 
production, reserves, financial position and future operations and 
development, business strategy and the trends anticipated in the industry 
and the political, economic, social and legal environment of operations, and 
other information that is not historical information, together with the 
assumptions underlying these forward looking statements. By their very 
nature, forward looking statements involve inherent risks, uncertainties and 
other important factors that could cause actual results, performance or 
achievements to be materially different from results, performance or 
achievements expressed or implied by such forward-looking statements. Such 
forward-looking statements are based on numerous assumptions regarding 
present and future business strategies and the political, economic, social 
and legal environment of operations in the future. No representation, 
warranty or prediction is made that the results anticipated by such 
forward-looking statements will be achieved, and such forward-looking 
statements represent, in each case, only one of many possible scenarios and 
should not be viewed as the most likely or standard scenario. Any obligation 
or undertaking to update any forward-looking statements to reflect actual 
results, changes in assumptions or in any other factors affecting such 
statements is expressly disclaimed. 
 
*For additional information contact:* 
 
*For MegaFon:* 
_Investors:_Dmitry Kononov, Director for Investor Relations and M&A 
Tel: [phone] 
Email: [e-mail] 
 
_Media:_ Artem Lebedev, Head of Media Relations 
Tel: [phone] 
Email: [e-mail] 
 
*For Mail.ru Group:* 
_Investors: _Tatiana Volochkovich 
Tel:[phone] 
Email: [e-mail] 
 
_Media:_ Ksenia Egorova 
Tel: [phone] 
Email: [e-mail] [2] 
 
*For Russian Direct Investment Fund:* 
_Arseniy Palagin, Press Secretary_ 
Tel:[phone], ext. 2395 
Mob:[phone] 
Email: [e-mail] [3] 
 
_Maria Shiryaevskaya / Andrew Leach_ 
Hudson Sandler 
Tel: [phone] 
 
*For Alibaba Group:* 
_Deborah Binks-Moore_ 
Mob:[phone] 
Email: [e-mail] [3] 
 
_Arina Khodyreva_ 
Mob:[phone] 
Email: [e-mail] [2] 
 
[*] BofA Merrill Lynch is acting as financial advisor to MegaFon and has 
provided a financial opinion letter in connection with this transaction to 
the MegaFon Board of Directors 
 
2019-06-05 MSK Dissemination of a Corporate News, transmitted by 
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The issuer is solely responsible for the content of this announcement. 
 
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(END) Dow Jones Newswires

June 05, 2019 12:31 ET (16:31 GMT)