Pavel Durov receives operational control over Vkontakte, indefinitely postpones IPO
29.05.12 16:57 By Petr Kanayev, Anastassia Matveeva, edited by Semyon Kvasha
Pavel Durov, the creator and CEO of the VKontakte social network
The Mail.ru group is a major shareholder in the network, They company first invested in 2007 buying 24.99% for $16,3 mln. In November 2010 Mail.ru increased its share by 7.5%, and the next summer realized an option to by another 7,44% for $111.7 mln. Two last deals were expecting a valuation of VK at $1.5 bln.
In the beginning of March 2011, Mail.ru Group CEO Dmitry Grishin declared that he was planning to buy out Vkontakte. CEO, Co-creator, and shareholder in Vkontakte, Pavel Durov didn't support this notion. "Vkontakte is an independent company, it has its long-term resources and its own mission. Mail.Ru Group's minority share in VKontakte doesn't allow it to influence our strategy. Mail.ru's share in Vkontakte can be only a financial investment, there are no plans for integrating on services level, management of advertisement, or sales between Vkontakte and Mail.Ru group services," Durov said at the time.
In July 2011 Durov, who owns approximately 12% the company
Nine months later, at the end of May, Mail.Ru Group key shareholder and billionaire Alisher Usmanov approved a plan to pass operational control over Vkontakte to Durov.
The conflict ended the yesterday, our source says. The details of this agreement were approved during a personal meeting between Vkontakte CEO Durov and Mail.Ru Group CEO Grishin.
On Monday afternoon Grishin told Gazeta.ru that negotiations with Vkontakte had not ended. "We are discussing a method of cooperation that will be comfortable for both sides. As soon as we find it, we will announce it. There are different options, the main message is: we are communicating and looking for the right solution," he said at the DLD Moscow conference.
Durov said that both Vkontakte and Mail.Ru Group will remain independent in their managements, but they have "Common issues and tasks to be resolved together."
"Mail ru has only a 40% share, which isn't enough to influence decision making," says Konstantin Belov, Uralsib analyst, who is not surprised by this DST style deal. "Also, for compaies like this it's important that the corrent management – the founders – continue working."
An hour after the agreement's press-release publication, on May 28 at 1am Moscow time, Durov announced in his twitter his first major decision after acquiring operational control: the Vkontakte IPO will be delayed indefinitely. "[an IPO for VK is] Not planned. FB's IPO destroyed trust in social networks among many private investors."
Durov talked about his company's IPO in January 2012. Our source in one Russian investment company says his company may try to increase Mail.Ru Group share in Vkontakte. "They may try [an IPO] later, but not necessarily."
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