Renault likely to raise stake in AvtoVAZ to 35 percent

Article by Christian Andrei, on June 28, 2011

Renault SA is likely to increase its ownership of AvtoVAZ, the largest vehicle manufacturer in Russia, to 35 percent, while Nissan Motor Co. may obtain 15 percent, Carlos Ghosn, the chief executive officer of the Renault-Nissan alliance, disclosed during a presentation to financial analysts of the six-year business plan of Nissan.

The company did not previously announce to the public the specific breakdown of the shares that the alliance sought in the Russian company.

The alliance has been in talks with the shareholders of AvtoVAZ in order to obtain major ownership of the Russian firm, which manufactures Lada cars. Ghosn has flagged the completion of the deal by the end of 2011.

Currently, Renault owns 25 percent plus one share of AvtoVAZ. The Russian government had already given its nod for the alliance to obtain a controlling stake of AvtoVAZ, which has a 24 percent market share in Russia, making it the largest vehicle manufacturer in the country.

Based on the current market value of AvtoVAZ, the additional 10 percent share of Renault and the 15 percent of Nissan would be worth around $415 million.

Ghosn informed the analysts during his presentation that the alliance would likely end up with around 15 percent shares for Nissan and 35 percent plus for Renault. He further explained that the 15 percent for Nissan will provide the company with some financial advantages.

Topics: renault, avtovaz

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