News: Alisher Usmanov, who owns a 25% economic stake in Mail.ru Group (via his USM Holdings Ltd), is looking to sell 15.5mn shares in the company (which represents 29% of his shareholding) to the market, reports Bloomberg, quoting the term sheet. According to the newswire, the selling price is set in the range of USD 34.25-36 per share, which suggest a discount of 4-8% to yesterday's closing price of USD 37.4. Thus the total amount of transaction might reach USD 531-558mn. If the transaction is completed, Mail.ru Group's free float would increase 7.4pp to 43% (from current 36%). USM will be unable to sell Mail.ru shares for six months, according to the statement. There is, as yet, no information on how Usmanov would use the proceeds of the sale.
Our View: Mail.ru's strong numbers, released on Tuesday, and special dividends announcement (USD 4.3 per share, suggesting a hefty dividend yield of 11.5%) suggest that there might be good momentum in the stock. Mail.ru Group's special dividends record date is set for 20 March 2013 and this might also facilitate the placement. After the sale, Usmanov would remain one of the two key shareholders in Mail.ru Group (along with Naspers) with an economic stake of 17.9%. ?The stock trades at 11.2x 2013F EBITDA pre-dividends, and 13.4x post-dividends, vs. about 15x for Yandex, its key Russian peer and Tencent, its key Chinese peer. Mail.ru has a similar growth pattern to Yandex: 25-28% top line growth, as guided by management for 2013, vs. 28-32% guided by Yandex. We remind investors that Mail.ru has historically outperformed guidance and that its 54.4% EBITDA margin last year was higher than the 43% posted by Yandex.