REX Global refused to buy 64.9% of Yota Devices shares and is reviewing the terms of the deal

The acquisition deal Yota Devices was recently canceled. According to Vedomosti, the terms of the takeover have changed, which is mentioned in the accounts of the Hong Kong holding REX Global. The total amount of the transaction was to be $ 100 million for a package of 64.9% of Yota Devices.

The reason for the revision of the terms of the deal was the listing committee, which suspected that the Telconet deal could be a reverse takeover. In this scenario, the absorbed company is worth more than the one that makes the takeover. For the first time, information about the takeover of Yota Devices appeared in October 2015, when the company's general director, Vladislav Martynov, told RBC about the planned transaction value of $ 100 million.
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Now the holding is considering the purchase of a 30% stake for $ 46.2 million, taking into account the payment of Telconet debts in the amount of $ 7 million and $ 27 million held by the subsidiary Yota Devices. Despite the acquisition of only 30% of Yota Devices shares, REX Global will have the right to exclusive use of patents and the YotaPhone trademark in China for seven years.

The stake will be transferred to the management of REX Global by Telconet Capital Limited Partnership Albert Avdolyan and Sergey Adonyev, who supported the idea of ​​launching a YotaPhone smartphone at the initial stage. The initial costs of the advertising campaign and the development of the first YotaPhone model were approximately $ 50 million, while data on the costs of developing the second generation were not disclosed. The company's revenue in 2015 amounted to only $ 10.3 million, which could affect the desire to sell the company's shares to REX Global holding.

According to IDC analysts, over the four years of its existence on the market, Yota Devices has shipped only 70 thousand - against the background of major smartphone makers, this figure only worsens the assessment of the company's potential. For comparison, Xiaomi sold 70 million smartphones in 2015 alone, and in 2014, the company sold 61 million smartphones. And even with these indicators, taking into account the cost of devices, analysts are skeptical when assessing the company. You need to understand that the margin in the production of YotaPhone is extremely low, which likewise affects the company's valuation.