Posted: 27 May 2014 06:43 AM PDT
thinkRUSSIA takes a look at an often unspoken area of business between Russia and Germany that is currently doing well and shows promise for the future – mergers and acquisitions.
Russia continues to be one of the key destinations for the Germany's merger and acquisition (M&A) business sector, according to a study conducted by international law firm Freshfields Bruckhaus Deringer on German mergers and acquisition (M&A) activities. The study identified Russia as German DAX and MDAX companies' most popular transaction place among the emerging economies between 2003 and 2014. The global 10-year study, which recorded transaction trends for the 80 German firms registered in the German stock indices DAX and MDAX, registered 111 M&A deals in Russia over the past decade, for a total worth of $13 billion. The number of German deals concluded in Russia equaled those made in France, traditionally Germany's largest trading partner, and exceeded those of Italy, Switzerland, China and India.
Between 2004 and 2013, German companies invested $493 billion in 2,795 M&A transactions globally. Around one quarter of these M&A's were concluded within Germany, another 20 percent in the USA and Great Britain. A total of 17 percent of the transactions were accounted for by the 15 major emerging markets, including India, China and Turkey –among which Russia features as the most important market for M&A deals.
Hear it from the professionals
According to the study, the most attractive sectors for mergers and acquisitions are the automotive, energy and pharmaceutical industries. Notable examples of such M&A transactions are Allianz's acquisition of the fourth largest Russian insurance company Rosno, Daimler's increase of its stakes in Russian truck manufacturer KamAZ from 11 to 45 percent in 2013 as well as German energy major E.ON's acquisition of shares in Russian power producer OGK-4, giving it an absolute majority of more than 75 percent in 2008.
Among the German companies currently concluding M&A deals in Russia, Siemens – which has been active on the Russian market for over 150 years – is probably one of the most well-known success stories. In 2010, for instance, Siemens and the Russian company Sinara jointly founded "Ural Locomotives" which up until now has produced 221 locomotive vehicles for Russian Railways. In 2012 Siemens set up a joint venture with the Russian power plant supplier Power Machines OJSC in which it holds a 65 percent stake. "For us it is extremely important to be active in Russia as a local player," said Michael Suess, CEO of the Siemens Energy Sector.
Fresenius Kabi, the second largest subsidiary company of Fresenius health care group, announced at the end of April 2014 that it would launch a joint venture with CJSC Binnopharm, a subsidiary of the Russian Sistema JSFC. Fresenius Kabi, the group's division for pharmaceuticals and medical devices for critically and chronically ill patients, will hold a 51 percent stake in the company. While Fresenius does not dispose of any production facilities in Russia, the joint venture "is an excellent platform for further growth in Russia and the CIS states," Fresenius said.
The Freshfields study thus shows that German-Russian economic ties have grown significantly and continue to go both ways and find a cornucopia of expressions, from joint ventures to acquisitions and green field investments.
What is your take on this study? Do you think there's room for improvement?
Posted: 26 May 2014 12:00 AM PDT
This week in Russia is the annual City Day celebration in St. Petersburg, Russia, on May 27, celebrating 311 years of culture and history.
A history of St. Petersburg
In the three centuries since its founding, St. Petersburg has developed a rich and interesting history. Here are some fun facts about St. Petersburg:
Celebrating the city
There is no shortage of celebrations for St. Petersburg's 311th birthday. Typically, there is the traditional laying of flowers at the Peter the Great monument and an evening fireworks show to be seen from the banks of the Neva River, as well as a parade on Palace Square.
Crowds will bustle on the famous Nevsky Prospekt to take in the sights and sounds of the celebrations, and often, special events are held at venues including the Peter and Paul Fortress and the Grand Philharmonic Hall.
Have you celebrated City Day in St. Petersburg?
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