Power Machines Group and OMZ (Uralmash-Izhora Group) have decided to merge the two companies, a move that will result in the creation of the largest power generation equipment manufacturer in Russia.
The combined company will focus its efforts on the engineering, production and sales of equipment for the power generation industry, including equipment for nuclear power stations. In particular, the company will provide comprehensive solutions for the construction and upgrades of power generation plants in Russia as well as abroad. It is projected that 70% of total sales of the merged company would derive from this segment.
Other business segments such as engineering and manufacturing of oil and gas onshore and offshore drilling equipment, mining equipment, shipbuilding and manufacture of specialty steel amongst others will continue to be managed as independent business segments within the framework of the combined entity.
The combined sales of the two companies would place the merged entity amongst the leading European manufacturers of power generation equipment. The company will be able to attract significant resources which will allow it to participate in large-scale projects. It is expected that transaction and administrative costs of the combined entity would decrease and the company would be able to attract financing at favorable terms.
The deal will be a merger of equals whereby the shareholders of Power Machines Group will receive 50% of the shares of the combined entity and 100% of the shares of Power Machines Group will be transferred to OMZ. OMZ will convene an extraordinary shareholders meeting to approve an additional issue of shares that will be exchanged for shares of Power Machines Group. The proposed name for the merged company will be OMZ-Power Machines.
The merged company will continue to adhere to the highest standards of corporate governance and the principles adopted and already applied at OMZ. It is expected that the Board of Directors elected at the first general shareholders meeting of the combined entity will have a majority independent directors. Shares of the company will be traded on the RTS stock exchange as well as the London Stock Exchange.
The merger of the two companies would not affect the existing regional tax payment systems. Tax payments will continue to be made according to the location of the respective enterprises.
OMZ is the largest Russian private heavy engineering corporation. The Company designs, engineers, produces, markets and services knowledge intensive equipment and machinery for the on- and offshore oil and gas industry, including transportation, the nuclear energy and mining industries. OMZ’s 2002 GAAP sales amounted to $435 million, a 39% increase over 2001. The Company has manufacturing and engineering facilities in Russia, USA, Romania and the Ukraine and sells its products to over 30 countries in the world. OMZ is one of four Russian companies whose securities are listed on the London Stock Exchange. The Company’s shares are also traded on the RTS stock exchange in Russia.