MAZ and KamAZ merger postponed
Belarus believes that Belarusian automobile manufacturer MAZ and Russian KamAZ could merge into a single holding Rosbelavto on equal terms only. Russian enterprise’s capacity and capitalization is significantly higher, therefore chances of the deal closure on Belarusian terms are low.
“We have a firm agreement [with Russian President Vladimir Putin – Ed] that if we merge assets it will be 50/50 with the corresponding management. However their management [Head of Rostechnologia Sergey Chemezov – Ed] is unhappy with 50/50. They want a controlling stake and say Belarus is asking for too much. Well, good, if it is too expensive, then do not accept”, President of Belarus Alexander Lukashenko said during June 14 meeting with the President of Bashkortostan Rustem Khamitov. Simultaneously, Alexander Lukashenko emphasized that Belarus was not intending to compete with KamAZ.
“Why should the holding company, which will include a variety of companies with different market capitalization and other factors, be created on equal terms? The resent assessment of MAZ by Ernst & Young was USD 800 million and KamAZ – USD 3 billion”, Andrey Tretelnikov, an analyst with Rye, Man & Gor Securities commented on Lukashenko’s statement. He noted that MAZ’s future was dependent on the Russian market, and that the Russian authorities had wide opportunities to deny access for Belarusian manufacturer to the market: by introducing additional environmental requirements or amending utilization fees. At the same time it could be anticipated that if the deal is not closing now, in the future, if crisis occurs, the Russian government could theoretically offer assistance to Lukashenko in exchange for MAZ shares.
For reference. The JSC MAZ is among the five largest public companies in Belarus except for banks after Beltransgaz, Naftan, Mozyr Oil Refinery and Belaruskali. In 2011 the company’s sales revenues were USD 1.266 billion, net profit – USD 340.4 million. An average rate of Br 6075.94 per USD has been used for calculations (taking into account the shadow segment of the currency market and our own assessment). In 2011 the average number of employees was 22.227 workers.
According to Belstat, in August 7,600 people were dismissed, including 4,800 civil servants. Dismissals of civil servants were due to the optimisation in the public administration by up to 30%. Some civil servants would retain their job however would lose the status of a civil servant. Vacancies on the labour market are likely to reduce in number, thanks to the optimisation, the state administration would increase wages for public servants. The payroll fund for retained employees is likely to increase and some former state employees are likely to get jobs in affiliated organizations. The optimisation of the state apparatus should complete by January 1st, 2018, and some former civil servants are likely to join the ranks of the unemployed.