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PARIS/MOSCOW - FRENCH car maker Renault agreed to buy a quarter of Russia's biggest auto maker, AvtoVAZ, aiming to revive the faded Lada brand and boost its hold on what will soon be Europe's largest car market.
Renault Chief Financial Officer Thierry Moulonguet told a conference call on Saturday that the Russian market, on course to overtake Germany's in a few years, was seen at 3.5 million to 4 million cars by 2015 against 2.3 million in 2007.
Mr Moulonguet declined to reveal a price but said the market value of AvtoVAZ was US$5.7 billion (S$8.2 billion) and that Renault was paying a 'reasonable multiple' over earnings for its 25 per cent stake.
'They gave us a fair price, close to the market price,' said Mr Sergei Chemezov, the head of AvtoVAZ owner, state-controlled Russian Technologies, previously known as Rosoboronexport.
Mr Chemezov said Renault had fought off competition from US General Motors, Italy's Fiat, Canada's Magna International and Germany's Volkswagen AG.
Renault and AvtoVAZ plan to make a car costing about US$15,000 to tap into Russia's booming car market and will boost total car production to 1.5 million units per year, Chemezov said.
AvtoVAZ's Lada brand would be kept, said Renault CEO Carlos Ghosn: 'The development of the Lada brand will be a priority.'
Mr Chemezov said Russian Technologies would later sell part of its own stake in AvtoVAZ at an initial public offering but retain a blocking stake, which means more than 25 per cent.
Mr Chemezov said Russian Technologies would also sell stakes to two Russian steel tycoons, Alexei Mordashov and Alexei Usmanov.
Mr Moulonguet said Renault would not raise its stake from 25 per cent but had a veto over any other industrial parners. -- REUTERS
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