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VSMPO in $970M management buyout

Keywords: Tags  VSMPO, Russian Technologies, titanium, management buyout, Claire Hack


LONDON — VSMPO-Avisma Corp.’s management will buy a 45.42-percent stake in their company from Russian Technologies Corp., according to VSMPO-Avisma.

Russian Technologies will decrease its holding in the capital of VSMPO to blocking shares, and management participation will increase to 50 percent plus one share. The deal is worth between $965 million and $970 million.

Management’s previous holding of 4.6 percent will now be transferred, along with the 45.42-percent stake, into a joint venture created for the deal. Under the terms of the agreement, 75 percent of the stake plus one share will be owned by VSMPO-Avisma’s management and 25 percent minus one share will be owned by Gazprombank JSC. The managers will pay $187 per VSMPO-Avisma share.

The weighted average price of VSMPO-Avisma shares on the Russian stock exchange has been $161 apiece for the past three months.

The company has also increased titanium output, VSMPO-Avisma said. "We expect production volume to increase 10 to 15 percent yearly until 2015," Sergey Chemezov, Russian Technologies’ chief executive officer, said in a statement.

"There is an agreement with Boeing (Co.) for high-tech products supply up to 2018, which provides excellent growth prospects. In our view, this is a good time to cede control to the management team that purchases the stock with a considerable markup to market price."

The company will look to increase volumes supplied to aerospace companies, in addition to expanding into developing markets, according to VSMPO-Avisma chief executive officer Mikhail Voevodin.

"Now the company controls about 30 percent of the titanium market," he said. "(Acquiring) mining companies in Ukraine will give us a permanent source of raw materials—as of today, we cover 30 to 40 percent of our raw materials requirements. We plan further large investments in this field in the future."

Earlier this week, Noble Resources Corp., VSMPO-Avisma’s ferrotitanium sales agent, had sent a letter to customers stating material produced by the company could be contaminated with asbestos (amm.com, Nov. 28).

A version of this article was first published by AMM sister publication Metal Bulletin.


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