The Russian web services firm Mail.ru has bought out VKontakte, the largest regional social network, thus consolidating Mail.ru’s control over the Russian social networking market and ending a complex legal battle between VK founder Pavel Durov and another investor.
The buyout became complete on Tuesday, when Mail.ru bought the remaining 48.01 percent that it did not own for $1.47 billion. The stake in question belonged to United Capital partners (UCP), run by Kremlin ally Ilya Sherbovich, which bought it off some of the VK co-founders (not including Durov) in April 2013.
Mail.ru, controlled by another Putin ally named Alisher Usmanov, gathered its existing stake through an earlier investment, which got it 40 percent, and by buying up the 12 percent stake sold last year by VK’s erstwhile CEO, the mercurial Durov.
It’s all rather complicated, but the end result is that VK – once a platform that would push back against Putin’s desire for greater censorship – is now firmly under Mail.ru’s control. The firm said in a statement that it will “fully consolidate” VK. As Mail.ru also operates the second-largest social network in Russia, Odnoklassniki, that pretty much means owning the local social networking market.
The takeover also means an end to a nasty legal battle that involved UCP, Durov and Mail.ru. Durov and Mail.ru claimed to have preemptive rights to buy the 48 percent stake that those other co-founders told to UCP, and sued to have the sale annulled. UCP and Durov really didn’t get along and UCP was widely seen as the reason for Durov’s resignation in April, which was bizarrely followed by an un-resignation, then an outright sacking.
When UCP got Durov kicked out, they also laid claim to his Telegram messaging app, which they said he had formulated on company time. That’s also now no longer an issue, as UCP have agreed to abandon their claims to Telegram.
According to Dmitry Grishin, the Mail.ru Group CEO:
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.