Renault-Nissan to buy controlling stake in Russian carmaker AvtoVAZ for $750 mn

The Renault-Nissan alliance yesterday said that it will form a joint venture with Russian Technologies Corp and signed a non-binding agreement to invest $750 million for a controlling stake in struggling Russian carmaker AvtoVAZ.

Renault and Nissan said in a joint statement that they would invest $750 million to take a 67 per cent share in a joint venture with state-owned corporation, Russian Technologies, with the venture holding 74.5 per cent in AvtoVAZ.

Renault will pay $300 million while Nissan $450 million and the alliance expects to complete the deal by 2014.
Under the deal, French carmaker Renault will merge its current 25 per cent stake in AvtoVAZ with the stake held by state-owned industrial conglomerate, Russian Technologies.

The joint venture will then buy the shares owned by Russian investment group Troika Dialog, in order to reach the 74.5 per cent controlling stake, giving Renault-Nissan an indirect 50.01 per cent stake in AvtoVAZ.

The Renault-Nissan alliance will hold three-quarters of the seats on the Russian carmaker's board, the alliance said in the statement.

Renault-Nissan said that Russian Technologies had agreed to restructure its $238 million loan with AvtoVAZ, which will give the Togliatti-based carmaker a strong balance sheet with no liquidity constraints.