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Renault buys blocking stake in Russia's AvtoVAZ for $1 bln

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The car manufacturing giant Renault-Nissan bought a blocking stake of 25% plus one share in Russia's largest carmaker AvtoVAZ for $1 billion on Friday.
MOSCOW, February 29 (RIA Novosti) - The car manufacturing giant Renault-Nissan bought a blocking stake of 25% plus one share in Russia's largest carmaker AvtoVAZ for $1 billion on Friday.

The parties signed a strategic partnership agreement focusing on interaction in developing new technology and joint marketing campaigns.

In the first six months of 2008, AvtoVAZ shareholders - state arms exporter Rosoboronexport and Troika Capital Partners investment - are expected to complete procedures to end the plant's cross-ownership structure and consolidate 75% plus one share. The 25% stake was transferred to Renault from these shares. The deal is planned to be finalized in mid-2008.

Renault launched production of the inexpensive Renault Logan model in Russia in late 2005 at the Moscow-based Avtoframos plant, in which the Moscow city government has a stake. The French giant invested $250 million in the project and plans to invest another $150 million to double the plant's capacity, which hit 80,000 cars last year.

In 2006, AvtoVAZ received 2.5 billion rubles ($100 million) in net profit, almost 80% up on 2005. Revenue in 2006 gained 15% on 2005 to reach 152.4 billion rubles ($6.1 billion). In 2007, the company expects to earn a total of 166 billion rubles ($6.6 billion).

The company sold a record 663,500 cars in 2007 and plans to roll out 1.5 million cars annually by 2015.

AvtoVAZ also plans to conduct an IPO in late September, the head of the plant's board of directors said.

"In late 2008 - in September or October - we plan to float our stock during an IPO," Sergei Chemezov said. "The shares will be traded in Russia and London."

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