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Alstom Plans to Complete due Diligence on Russia's TMH in early 2009

24.10.2008 16:41
Section: Different
France's Alstom plans to complete due diligence in early 2009 on Transmashholding (TMH), Russia's largest railway machine building company, as part of a memorandum on strategic
partnership under which the French concern is buying 25% plus one share in the Russian company, Interfax reports referring to a source familiar with Alstom's plans. At present, the potential transaction includes all of TMH's consolidated assets with the exception of Tver Rail Car Plant, which is controlled by TMH and its co-owner Russian Railways (RZD) (RTS: RZHD), the source said.

Alstom Transport and TMH signed a memorandum of understanding on strategic partnership in early October.

"The document covers cooperation between the companies and gives Alstom Transport the opportunity to acquire 25% plus one share in TMH following an audit and the signing of a final agreement," TMH said.

The two companies signed the memorandum after Canada's Bombardier, which was believed to be the most likely candidate for the purchase of the TMH stake, suspended talks with TMH in late September. "They did not expect TMH to be so expensive," said a representative of RZD, which owns a minority stake in The Breakers Investments B.V., TMH's sole

A source familiar with the talks told Interfax at the time that Ernst & Young had previously valued TMH at $2.9 billion. The valuation did not include Tver Rail Car Plant.

Transmashholding (RTS: TRMH) is wholly owned by The Breakers Investments B.V., a company thought to be controlled by the co-owners of Kuzbassrazrezugol: Iskander Makhmudov and Andrei Bokarev.

TMH has production facilities in St. Petersburg, Bryansk, and Penza; in the Moscow, Rostov and Tver regions and in Switzerland.

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