Delivery van maker LDV is talking to Russian vehicle maker GAZ with a view to the possible sale of the Birmingham-based van business.
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This news follows some six months after LDV was bought by Sun European Partners, the European arm of US leveraged buyout company Sun Capital Partners. Sun Capital and LDV attracted considerable criticism during this buyout as it occurred within hours of LDV entering administration with debts of GBP234 million.
A London-based Sun Capital spokesman indicated that a number of options were being explored, stating that: “To get the business where it needs to go, it (LDV) needs additional distribution channels.”
A short statement issued by Sun Capital today confirmed that Sun Capital and GAZ Group are in ‘preliminary discussions regarding GAZ acquiring LDV Group’. The statement also said that ‘there can be no certainty that these discussions will lead to an agreement’.
Reports from local Birmingham news sources suggest that the proposed deal will give GAZ a GBP10 million rights deal allowing the LDV product range to be assembled in Russia. Linked to this is an option – to be exercised within six weeks – to buy the whole company. Sun Capital’s spokesman indicated that this was one of a number of different options being considered.
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By GlobalDataWere this scenario to play out, it would immediately call into question the viability of LDV’s Washwood Heath, Birmingham facility.
Speaking to the Birmingham Post newspaper, Tony Woodley, head of the Transport & General Workers’ Union seemed to regard the move as a positive one for the Birmingham plant and its 600-strong workforce.
“This is a natural follow on because what we have here is a Russian company which already has an interest in van production,” he is reported to have said.
“The hope and belief is that there will be investment and an opportunity to build more than we presently do. It is not about ‘lift and shift’.”
GAZ is fast becoming a reckonable force in not just the Russian but also the global automotive market. It is Russia’s second largest car and truck maker, and plans to make an initial public offering (IPO) in Russia sometime in the second half of 2007 according to a disclosure statement.
Moreover, the company is also mulling an IPO on a foreign stock market sometime in the second half of 2008. Most recent figures – 2005 – show that the GAZ group posted a net profit of 3.080 billion rubles on sales of 140,000 vehicles.
Oliver Dixon
See also:
just-auto Q&A: where next for LDV?
UK: Lifeline offer agreed at van maker
