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12 Dec, 2008 11:50

Daimler shifts into gear for Kamaz stake

As the US Senate rejects the $14 Billion bailout plan for automakers, Germany's Daimler defies the sour mood. It bought a 10% stake in Russia's top truck maker Kamaz for $250 million, which could rise to $300 million depending on how Kamaz performs.

While Global automakers slam the brakes on their investment plans, Germany’s Daimler is stepping on the gas.

On Friday, Andreas Renscher, Head of Daimler Trucks, said the automaking giant will buy a 10% stake in Russian truck maker Kamaz as it seeks to seize the opportunities in the market that could soon become one of the world's largest for trucks.

“This strategic partnership has meant that we are now exploring a lot of different ideas from Kamaz.  When you look to different projects, it could be light duty trucks that we can sell through Kamaz, it can up to a big cab for the existing product.”

The deal values Kamaz at $3 Billion, a hefty premium to its current market price of just about $750 million.
The stake’s seller is one of Russia’s top investment banks Troika Dialog. Its chairman Ruben Vardanyan explained the financial details of the deal.

“Daimler will pay $250 million today for 10% of the shares of Kamaz, and we have a special formula which will be accounted during the next 3 years – 2009-2011 -  and depending on the results of Kamaz, by profit, by revenue, by EBITDA, we can earn up to $50 million cash to the shareholders who sold the shares today.  Basically we can be paid $300 million for 10% of the shares of Kamaz.”
Kamaz CEO Sergei Kogogin says that, with his company having a market share of about 30 percent in Russia, the synergy between the two companies is obvious.

“Even in the midst of the crisis, Russia’s market is one of the biggest in Europe, so fighting for its share will only intensify in the future. Daimler is the world’s largest truck maker, and we are the biggest truck producers in the country.”

Daimler is under no future obligation to raise its stake in Kamaz. But it does have the first right of refusal if and when Troika decides to sell the remaining 44 percent.

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