NEW YORK (TheStreet) -- Vimpelcom (VIP) shares are up 7.5% to $5.66 in trading on Tuesday after the company reached an agreement with Hutchison Whampoa over who would be named CEO of their combined company should the two telecom holding companies complete the proposed merger of their Italian businesses.
The companies are backing Maximo Ibarra, CEO of VimpelCom's Wind Telecomunicazioni unit, as CEO of the new company, according to Bloomberg sources. Amsterdam-based Vimpelcom and China-based Hutchison have been engaged in talks to consolidate their Italian interests in an effort to create Italy's largest telecom carrier.
The management structure of the new company has been a sticking point in negotiations, according to Bloomberg sources, as the combined company's would have a total of 30 million customers and annual revenue over $7 billion.
No final decisions have been made concerning the company's management structure and sources say that a potential deal could still fall apart.
TheStreet Ratings team rates VIMPELCOM LTD as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate VIMPELCOM LTD (VIP) a SELL. This is driven by a number of negative factors, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its generally high debt management risk, weak operating cash flow and generally disappointing historical performance in the stock itself."