Renault-Nissan to Raise its Stake in AvtoVAZ

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Nov. 1 – French auto-maker Renault SA and its Japanese alliance partner Nissan Motor Co. are in negotiations with Russian investment banking company Troika Dialog in a bid to purchase its 25 percent holding in Russia’s AvtoVAZ, the brokerage said Thursday.

“As part of our long-term strategy, the alliance will continue to make investments in our business in Russia, which could include taking a larger stake in our local partner,” Renault-Nissan spokesman Simon Sproule said in an e-mailed statement.

Renault acquired a 25 percent stake in AvtoVAZ in 2008 for US$1 billion. Nissan isn’t an AvtoVAZ shareholder.

“Troika Dialog is in negotiations with Renault-Nissan,” Troika managing director Sergei Skvortsov said in an e-mailed statement to The Moscow Times. “The talks are at a very early stage.”

Renault CEO Carlos Ghosn also confirmed negotiations of Troika’s stake, which was worth US$379 million at Wednesday’s closing price, in an interview with Russia Today television late Wednesday.

“We are planning to buy Troika’s stake in AvtoVAZ and we are in talks about this,” he said.

At the same time, parties are emphasizing that they just started discussions.

“No decision has been made by either Renault or Nissan concerning the purchase of additional AvtoVAZ shares,” the two companies said in an emailed statement.

Earlier this month, AvtoVAZ said it hopes the Japanese manufacturer Nissan will take a stake in the firm if put up for sale by Troika.

If the deal goes ahead, the Renault-Nissan axis would control just over 45 percent of the group.

Renault-Nissan had, until now, resisted public pressure from Russian officials including Prime Minister Vladimir Putin to increase the 25 percent stake in AvtoVAZ.

Putin said earlier this year that Russia could acquire part of the French government’s 15 percent stake in Renault if the auto-maker decided to increase its holding in AvtoVAZ. “We had discussed it recently,” Putin said. “It would be an interesting, very powerful cooperation.”

The French carmaker raised US$4.2 billion on October 7 by selling a 14.9 percent stake in Volvo, saying at the time that the sale was designed to “strengthen Renault’s balance sheet” and pay off debt.

Troika, Renault and state-owned Russian Technologies each hold 25 percent of AvtoVAZ. Troika, Russia’s oldest brokerage, said in March that it was “ready to exit” AvtoVAZ.

Oleg Lobanov, vice president for finance at AvtoVAZ, said earlier this week that the carmaker expected a net income of 1 billion rubles in 2010 under Russian accounting standards. AvtoVAZ had a nine-month net income of 622 million rubles, he said.

Russia has offered to acquire part of the French government’s 15 percent Renault stake if the car-maker increases its holding in AvtoVAZ, Putin said in June.

Renault agreed a year ago to contribute technology worth 240 million euros to help AvtoVAZ develop new models and improve efficiency.

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