AG of Germany and Alexei Mordashov, Russian oligarch and head of Russian steel
maker Severstal have signed a strategic partnership agreement for the modernisation
and development of OAO Power Machines.
whose Highlight Ltd. acquired 30.4 per cent of Power Machines from Russian investment
company Interros, is now the largest shareholder of the loss-making Russian power
equipment maker. He will appoint the chief executive officer of the company.
which holds a blocking stake of 25 per cent plus one share, and whose technology
and experience will be sorely needed to turn around Power Machines, will appoint
the chief operating officer. Russian public sector electricity company Unified
Energy System also has 25 per cent plus one share. The remaining shares are with
minority investors. It is reported that Unified Energy Systems may soon auction
off its holding.
2006, Power Machines made a net loss of $132 million. Its revenues were $579 million.
Its performance had deteriorated from a level of a $40.5 million loss on revenues
of $667 million in 2005.
Machines, an ''open joint-stock company'', is a leading Russian manufacturer and
supplier of equipment for hydro-electric, thermal, gas-based and nuclear power
stations, and for power transmission and distribution systems. It runs the Leningrad
Metal Factory, Elektrosila, Turbine Blades Factory, and the Energomashexport marketing
company. It also has a 35 per cent stake in NPO Polzunov Scientific and Development
Association on Research and Design of Power Equipment (St. Petersburg). Power
Machines has exported its equipment to 87 countries worldwide.
surrendered its right to the Interros stake in Power Machines after Russia''s anti-monopoly
regulator refused to let Siemens get a majority in the company. Siemens had also
failed earlier, in 2005, to acquire Power Machines, because of Russian security
concerns since one of Power Machines'' units makes turbines for Russia''s nuclear
a strategic 25 per cent-plus stake in the Russian company is the next best thing.
Rudi Lamprecht, a member of the Siemens corporate executive committee, says, "Implementation
of the agreements reached will be a vital contribution toward targeted further
development of Power Machines as a leading company in the construction of power
machinery equipment in Russia."
Siemens management believes that the agreement will enable Power Machines to "gain
access to state-of-the-art technology and advanced business and management processes".
The German company will also provide experienced managers and experts for the
Power Machines'' growth.
Russian partner is unlikely to be satisfied with catering only to the home market.
Says Mordashov, "The partnership will ensure that Power Machines ambitious
investment projects can be rapidly implemented. Combining our experience in the
management of Russian assets with the technological strength of Siemens will empower
Power Machines to gain and develop the most important competencies in power machinery
construction and ensure the company''s strong competitiveness not only in the Russian
market but also in the most important international markets outside Russia."