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Mergers and Acquisitions of Russian Market
December 14, 2006 13:47

The M&A market is found relevant in lots of countries including Russia. The other day the informational agency Bloomberg published its traditional annual market research across the globe. A bit earlier, in the middle of November, the third annual national forum Mergers and Acquisitions of Russia took place. The research results determined the rating of the most civilized transactions at the M&A market.

Western M&A markets got used to mergers prevailing over acquisitions, but as for the Russian part, here acquisitions form the major share of dealings. No wonder that record high rates of transactions’ number ($3.1tr in the world and $52-57bn in Russia) have generated a need to conduct an audit for quality of transactions in the RF. The “quality” implies conformance of transactions to world standards. 20 deals made at the Russian M&A market were found corresponding high corporate standards. According to the survey results they beneficially affected the economy of the country. Here’s the list of the most successful and significant transactions:

Russian Aluminum – SUAL – Glencore

 Experts gave the top position to the recent merger of Russian and foreign aluminum companies – Russian Aluminum (Rusal), SUAL and Glencore. Rusal controls a wide range of plants dealing with aluminum processing. August 2006 Rusal started repurchase of its own stock in view of upcoming merger with SUAL and Swiss Glencore. The companies merged October 9. Rusal’s share in the joint company made up 66%, SUAL’s – 22%, Glencore’s – 12%.

Guta Group – Factory Krasny Oktyabr (Red October)

 The second from the top is Guta Group with its project of the factory Krasny Octyabr’s transfer from the Swamp Island located in the center of Moscow to the territory of the business concern Babayevsky. Both the factory and the concern are the leading sweet and chocolate manufacturers in the RF. The biennial transfer project started in 2005 in the framework of the programs Golden Island and Reorganization and Development of Industrial Areas conducted by the Moscow government. 150 thousand square meters of dwelling space are planned to be constructed at the factory’s former territory. The total volume of investments put in the project exceeds $500 million.

Basic Element

 August 2005 the holding Basic Element dealing with machinery, natural resources, power, financial services, construction and development, purchased the controlling stake of the Moscow property developer Razvitiye. Experts believe that the company will definitely occupy one of the leading positions at the real estate market. Today Basic Element is investing $1bn in housing construction in the Moscow Region.

Private investors – Krasin pencil factory (Moscow)

The last positions in the list are occupied by private investors, who bought the pencil factory and took all production facilities to the territory of the plant Mosgormash. All employment positions have been held. A developer project is being implemented at the factory’s former territory these days.

Unfortunately, Russian M&A market still can’t meet the requirements of world standards. At the same time more and more companies introduce their stock to the foreign Exchanges. In this case transparency and scrupulousness of business play a great role.



Olga Pletneva

Tags: Russian companies Russian economy Rusal   

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