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The biggest deal in St. Petersburg in 2014 is in progress. State Concern Rostec is close to gaining control over corporation Power Machines owned by Alexei Mordashov with revenues of 64.9 billion roubles. Three independent sources give such information but the company officially calls it “market speculation"
Experts are not ready to evaluate this prospective deal on the spot. It is known that in 2007 the structures of Alexei Mordashov bought a 30.4% stake in Power Machines for $ 470 million. Since then, the Russian authorities had denied giving another shareholder, German Siemens, permission to consolidate the controlling stake in the corporation, and in the end, after a chain of transactions the company went to Alexei Mordashov in full. Now, according to the company's website, 100% of the share capital of Power Machines is owned by HIGHSTAT LIMITED whose beneficiary is Alexei Mordashov.
Firstly, dp.ru found about the sale of Power Machines OJSC by Alexei Mordashov on December 22, from an assistant of one of the St. Petersburg State Duma members.Secondly, according to a source in the parliament, the Power Machines CEO, Igor Kostin is resigning. His resignation, if promulgated will be associated with the change of control over Rostec - said another source familiar with the situation, an employee of Power Machines working in the St. Petersburg office.
"Yes, indeed, our CEO is leaving not later than January 15, and there are rumours that we will become part of “Russian Technologies”, - said the employee.City officials have also heard about the deal. "As long as I know it is only at the level of rumors, there are no details, - said the head of the Committee for Industrial Policy and Innovation in St. Petersburg, Maxim Meyksin. - If this is true, it means that the state retains control over strategically important production for the country."Representatives of Power Machines declined to comment on the course of the transaction, or even to talk about it, calling it "market speculation." The representative of Rostec also said that he was not aware of this information and would only be able to clarify it the next morning.
The day after the publication of this article, the representative of Alexei Mordashov officially commented on the information about the transfer of control over the company to Rostec. According to him, there are no, and never were, any negotiations for the sale of Power Machines OJSC.
"Not long ago the city authorities had a very unpleasant conversation with Power Machines about the transfer of land from industrial to residential use status - says Maxim Meyksin. The intention to vacate 90 hectares of land in the centre of the city, which are now occupied by Power Machines plants, and to transfer production to Metallostroy was announced by Alexei Mordashov in March 2014. - But we refused for fear of the possibility of losing the only Russian production of turbines. Perhaps it could have contributed to the decision of the owners to sell the company. "
"The staff of the plant reacted very negatively to the move to Metallostroy. After moving one of the shops from Elektrosila, most employees left because at the same level of wages the time for getting to work had increased several times," - said Stepan Meltsov, chairman of the territorial trade union organization "Zashchita". According to him, the departed employees have been replaced with workers from Belarus, who were willing to work under such conditions. "It seems to me that private investors don’t want to invest in Power Machines. Mordashov probably wants to attract a foreign investor, namely, Siemens, and the state told him that the company being a strategic enterprise cannot be given to the Germans. After that, he apparently decided to get rid of the shares - said the assistant of a State Duma deputy. - The last major order performed by Power Machines was the supply of equipment for the restoration of Sayano- Shushenskaya HPP. The contract was executed in 2014. The plant doesn’t have orders of comparable volume for the near future".
According to Ivan Grigoriev, Chief Executive of SIG Surveillance "Price of Power Machines taking into account the excellent past financial performance, by the end of 2013 could have been estimated at $ 2 billion. Given the recent values of sectoral multipliers "fair" value of the company today could realistically be $ 350-575 million. However, given the current economic and political situation and exchange rates, the company’s value could have dropped to $ 150 million”
According to some experts interviewed by dp.ru acquisition of Power Machines by state corporation Rostec is a logical step in the current economic situation, when it is quite difficult for a private investor to attract financial resources for the modernization of a large Engineering holding; Power Machines account for 4% of the world marketing energy engineering. Order portfolio of the holding is estimated at $ 6 billion. And a significant portion of orders from government agencies, such as Rusgidro, provides an enviable return for the holding of about 20%, which is significantly higher than that of competitors General Electric, Siemens, and Alstom. The share of export orders in the portfolio is 35%.
A few years ago Power Machines management adopted a programm of renovation in production capacity and improvement of production organization, which should increase labour productivity in the holding company and bring it on par with global industry leaders. In 2012a project was completed for the construction of the first starting complex of the plant aimed at producing a new product for Russia’s energy engineering - low-speed steam turbines for nuclear power plants. In addition, for further development of new production, besides the existing nomenclature it is planned to increase production of high power steam turbines and turbogenerators (over 500 Mw) for large coal units. In 2013, the company launched a plant jointly with Toshiba to produce power transformers and is in the process of building a plant together with Siemens to produce gas turbines. The total investment in both projects is about 20 billion roubles.However, with today's political situation, it has become more difficult for Alexei Mordashov to attract foreign investment and new technologies.
"Japan, Germany and other developed countries having funds and advanced technology, have adopted sanctions against Russia. It has become more difficult for Mordashov to conduct energy engineering business in such conditions. He has recently increased investment in his gold mining assets. At the same time, Rostec has been consolidating assets in energy engineering for quite a while. In addition, the products of Power Machines are made of special steel, the production of which is carried out partly by Rostec enterprises. And the government too is interested in concentrating in it’s hands the enterprises that produce almost the entire nomenclature of energy engineering ", - says the head of the analytical department of financial advisory “Lenmontazhstroy”, Dmitry Kumanovskiy.
"Delovoi Peterburg", 12/23/2014, 20:39
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