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Russia hopes to get behind the wheel
ft.com ^ | June 2 2009

Posted on 06/02/2009 4:18:50 PM PDT by Tailgunner Joe

When Barack Obama, US president, announced his decision to shepherd General Motors into bankruptcy on Monday, Vladimir Putin, Russian prime minister, was conducting some car industry business of his own.

Mr Putin met in Moscow with Siegfried Wolf, co-chief executive of Canada’s Magna International, and German Gref, head of Sberbank, whose groups are due to take a controlling interest in GM’s spun-off European Opel division in a deal to be negotiated in the coming weeks.

Two days earlier, when Magna and Sberbank won preferred bidder status over Italy’s Fiat for a joint 55 per cent stake of Opel, Mr Putin arrived at a public appearance at a church driving a Soviet-era Gaz-21 model, made by the car and truckmaker now owned by oligarch Oleg Deripaska. On Tuesday he was at the opening of Nissan’s new car plant in St Petersburg.

If Magna and Sberbank close the Opel deal, Russian investors will control one of GM’s oldest overseas businesses, and Gaz will produce Opel-designed cars at a big new factory in its home town of Nizhny Novgorod.

The purchase could thus make Russia a big net beneficiary of the shake-out rocking global carmaking by lifting the fortunes of troubled Gaz, one of the biggest employers in its region.

On Saturday, Mr Putin’s spokesman denied any link between his choice of car and Magna and Sberbank’s bid for Opel.

“The Russian government has not taken any direct part in this deal, but we welcome the work Sberbank has done,” Russia’s Vedomosti newspaper quoted the Russian prime minister as saying after the meeting with Mr Gref and Mr Wolf.

Alexei Kudrin, finance minister, said on Monday that there would be no support from the federal budget for Sberbank’s purchase. However, he added that the Kremlin took “a positive view of this deal”, saying: “It seems to me that it is in the interests of the Russian motor industry, because Opel is well known to be one of the most advanced enterprises as regards progress in the key areas of the motor industry.”

The bidders have made few public comments about their plans, leaving analysts to connect the dots in a country where business, finance and politics commonly commingle.

Dave Nangle, a director with the investment bank Renaissance Capital, said the Opel acquisition was an “opportunistic” step to help fast-forward the modernisation of Russia’s car industry.

Sberbank, which holds about 60 per cent of Russian retail deposits, is also one of the biggest lenders to the Russian auto industry, supporting Gaz, carmaker Avtovaz and truckmaker Kamaz. It has not until now ventured into private equity deals.

Sberbank’s Mr Gref has declined to provide details about the Opel deal, except to say that it will take several weeks to finalise.

“It is a very good opportunity for Russia to acquire one of the most technologically advanced automakers in Europe at an unprecedentedly low price,” he told Russia’s Vesti 24 television station.

Analysts said Sberbank’s strategy could be to hold the Opel stake for a later sale to a Russian industrial company after the economic crisis subsides.

Gaz is not a direct party to the Opel stake sale but will serve as an industrial partner for the carmaker, offering the services of its huge new plant.

Gaz built the facility, with capacity to produce 180,000 cars, to make the Siber, a car based on Chrysler’s Sebring model, which has flopped on the Russian market.

Gaz said it “would guarantee the consortium fast and effective access to the Russian automobile market with Opel’s newest designs”.

Mr Deripaska’s Basic Element was formerly a big shareholder in Magna, paying $1.54bn for a strategic stake in the Canadian parts maker in 2007. In November, after the financial crisis hit, he sold the stake as his banks called in loans.

Magna, in addition to its direct investment in Opel, stands to profit via a new Russian car-parts plant it is building to serve carmakers including GM and others in the country.

GM, which will retain a 35 per cent stake of Opel after the sale, could also profit from bigger scale in Russia, its second-largest market in Europe after Germany.


TOPICS: Foreign Affairs
KEYWORDS: deripaska; oligarchs; opel

1 posted on 06/02/2009 4:18:50 PM PDT by Tailgunner Joe
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To: Tailgunner Joe

Don’t see too many Opals in any James Bond movies, now do ya?


2 posted on 06/02/2009 4:20:14 PM PDT by princess leah
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To: Tailgunner Joe

“It is a very good opportunity for Russia to acquire one of the most technologically advanced automakers in Europe at an unprecedentedly low price,”

The Kleptocractic neo Soviets and OPEC break our economies with extortionate oil prices, then steal our wealth and know how.


3 posted on 06/03/2009 6:00:54 AM PDT by plenipotentiary (Free the Oil, Topple the Saudis. Confiscate Putins money. Disconnect Siberia.)
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