28 Nov 2022 10:54

Avtodom approves acquisition of Mercedes' Russian asset with buyback option

MOSCOW. Nov 28 (Interfax) - The shareholders of JSC Avtodom, the controlling entity of the eponymous Russian automobile dealership group, voted at an extraordinary general meeting to approve the acquisition German automaker Mercedes-Benz's Russian assets with an option to repurchase, the company said in a statement.

Mercedes officially announced at the end of October that it was leaving Russia and selling its stakes in local subsidiaries to Avtodom, including official distributor in Russia Mercedes-Benz Rus; the Mercedes-Benz Manufacturing Rus (MBMR) plant in Moscow Region; leasing company Mercedes-Benz Financial Services Rus; Mercedes-Benz Bank Rus; and auto leasing and factoring firm Mercedes-Benz Capital Rus.

This deal was approved by a mail-in extraordinary general meeting on November 23, with the German company given an option to buy back the stakes in these companies "for a fair market price that is subject to determination by an independent appraiser," Avtodom said.

The company did not disclose the price of the transaction or when it is expected to be closed.

"The main priorities when negotiating the terms of the transaction were to maximally ensure the fulfilment of obligations to customers from Russia, both in the area of after sale servicing and provision of financial services, and to preserve the jobs of the employees of the company's Russian divisions," Mercedes-Benz Rus CEO Natalya Koroleva said when the deal was announced a month ago.

Russia's Industry and Trade Ministry said then that Avtodom, as the new owner of the German company's Russian divisions, might bring in other companies as manufacturing partners in order to set up joint production of automobiles at MBMR. The ministry said it planned to help the company find a partner.

"As a result of the negotiation process, we managed to arrive at the final stage of approval of the investment deal. It's important that this will make it possible to ensure the operating capacity of the plant, and preserve highly skilled jobs and competencies. After the completion of all approvals, the new owner of Mercedes-Benz's Russian division, Avtodom will be able to carry out servicing of Mercedes-Benz automobiles sold on the Russian market," Deputy Industry and Trade Minister Albert Karimov, who oversees the auto industry, said.

Avtodom said at the time that it had reached the final stage of agreeing on an investment deal with Mercedes-Benz, and that it would soon select a technology partner for the further operation of the plant in Moscow Region. It did not say who might become the new partner.

Moscow Region Governor Andrei Vorobyov said in early September that a Chinese partner was being selected to operate at the plant. "I really hope that Mercedes returns. If not, work is now underway there on selecting a reliable automaker with stable demand for its automobiles, including a Chinese one," Vorobyov said, adding that he believed the plant would resume operations "in one form or another."

The MBMR plant at the Yesipovo industrial park in Moscow Region took two years to build and only opened in the spring of 2019. It has capacity to manufacture 25,000-30,000 vehicles per year. The plant's first model was an E class sedan. The company planned to gradually start producing GLE, GLC and GLS SUVs at the plant.

Avtodom Group, founded in 1992, has 27 dealerships in Moscow, St. Petersburg and Krasnodar. The company specializes in selling and service luxury cars and has 13 brands in its portfolio: BMW, BMW Motorrad, MINI, Lamborghini, Porsche, Audi, Mercedes Benz, smart, Volvo, Land Rover, Jaguar, Aurus, Ducati and KTM.

Avtodom has disclosed that its principal shareholders are Andrei Olkhovsky, who controls 50.1% through Bridge Capital LLC, and Andrei Koston with 46.8%.