Russian Railways president Vladimir Yakunin (in the photo) said that negotiations will now begin with other contenders for Transmashholding.
Photo: Mikhail Razuvaev
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Bombardier Derailed in Russia
One of the biggest deals ever in Russian heavy industry has been called off. The Canadian concern Bombardier has severed negotiation on a merger with Transmashholding, the Russian monopoly manufacturer of locomotives. The source of contention was the price of the Russian holding. Now the Russians will begin negotiations with the French Alstom and German Siemens. The continuing world financial crisis complicates the scenario, however.
President of OAO Russian Railways Vladimir Yakunin held negotiations with Bombardier executive director Pierre Beaudoin yesterday at the InnoTrans exhibition in Berlin. Russian Railways holds a blocking share package in Transmashholding. Negotiations began at the end of last year. “Bombardier was surprised at the high price of the holding,” Yakunin explained to Kommersant. The owners of the Ural Mining and Metallurgy Co. and TransGrupp AS will conduct negotiations with the other contenders for the holding.
ZAO Transmashholding is wholly owned by the Dutch Breakers Investments, which is, in turn, owned by Iskander Makhmudov, Andrey Bokarev, TransGrupp AS and Russian Railways. The holding’s receipts in 2007 under Russian accounting standards totaled 45.2 billion rubles. Its net profit was 275.5 million rubles.
Yakunin said that the price for the holding was set on the basis of an assessment done a year ago by Ernst & Young. It was evaluated at $2.9 billion but, since it does not own controlling packages in all of its assets, that figure was reduced to $2.38 billion. The analysis done by Bombardier arrived at results close to the same figure. In addition, Bombardier wanted to include the Tver Railcar Building Plant, which is owned on an equal basis by Transmashholding and Russian Railways, in the deal.
Bombardier also changed the terms of the deal in the course of its negotiations. At first, an exchange of assets, a controlling package in Breaker Investments for a controlling package in Bombardier, was considered. Then the discussion turned to a simple purchase of Breaker Investment shares by Bombardier, with a merger of the companies delayed by several years. Analysts say the world financial crisis may have played a part in the collapse of the deal.
www.kommersant.com
All the Article in Russian as of Sep. 25, 2008
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