On March 11, 2004 OMZ (Uralmash-Izhora Group) and Power Machines announced a cross purchase of shares between the companies. These acquisitions are a step further in the integration process that would eventually lead to the official merger of the two companies at the end of this year. The merger will be effected though an exchange of shares of Power Machines for shares of OMZ whereby the shareholders of Power Machines will receive 50% of the shares of the combined entity and 100% of the shares of Power Machines will be transferred to OMZ. OMZ’s shareholders approved an additional issue of common shares at the February 27 EGM and OMZ’s Board of Directors is expected to approve the share prospectus by the end of the week.
The cross holding of shares of the two companies involves the ownership of 11% of shares in Power Machines by OMZ and 14% of shares in OMZ by Power Machines. OMZ acquired the holding from companies representing the interests of the majority shareholder of Power Machines, Interros, and their partners, while Power Machines purchased the OMZ shares from a portfolio investor. The share of OMZ’s CEO, Mr. Kakha Bendookidze, remains unchanged at 25.93%.