AvtoVAZ set to negotiating the purchase of Asia Auto straight after French Renault acquired a blocking stake in Russia's automobile giant.
Photo: Vasily Deryugin
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AvtoVAZ to Acquire Carmaker in Kazakhstan
The partnership of AvtoVAZ and French Renault has started by the CIS expansion. AvtoVAZ that is already holding due diligence for Izhavto, Udmurtia, will probably buy out the controlling stake in another assembling plant, Asia Auto, Kazakhstan, in September. Both acquisitions will cost at least $700 million to the consortium. In the next move, AvtoVAZ and Renault may halt the production of Skoda and Chevrolet at Asia Auto and strengthen the standing of their own models on the markets of CIS and Asia.
AvtoVAZ is in talks with Asia Auto holders about the purchase of 50 percent in the enterprise, said a few top managers of the automobile giant. The negotiations began in February, the progress in them is smooth and the deal will be closed in September if both parties finally agree on the terms.
Russia’s authorities are likely to bolster the project. The issue of AvtoVAZ acquisition of controlling stake in Asia Auto is to be discussed during the visit of Russia’s President Dmitry Medvedev to Kazakhstan, one of the sources specified. The deal amount hasn’t been agreed on yet.
AvtoVAZ is really interested in Asia Auto, AvtoVAZ Group President Boris Aleshin confirmed, adding that “negotiations about the possible purchase of the enterprise are underway.”
If the deal is clinched, AvtoVAZ intends not only to use the facility’s capacity at 100 percent but also to widen it to 120,000 cars a year. In the enterprise, they say that growth will turn the plant into a ground for expansion to Siberia and Far East. The Lada models of Kazakhstan assembly will be competitive behind the Urals, as Russia and Kazakhstan have the free-trade area and Asia Auto will be getting components and parts for assembly free of duties, said Ivan Bonchev from Ernst & Young.
The timing of the negotiations’ start is interesting, they began straight after French Renault acquired a blocking stake in AvtoVAZ. At the same time, AvtoVAZ set to negotiating the purchase of another assembly asset, Ishavto, and inspected the facilities of Avtotor (Kaliningrad).
www.kommersant.com
All the Article in Russian as of May 23, 2008
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