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UPDATE 2-Sberbank moots Avtovaz link with Opel/Magna

Published 06/18/2009, 12:23 PM
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* Says Russia's top carmaker could join Opel deal

* Says Russian car sector overhaul is goal of Opel deal

* Says goal is for Opel to produce 3 million cars/year

(Adds German state premier background, details)

MILAN/MOSCOW, June 18 (Reuters) - Russia's largest car maker AvtoVAZ could be folded into an alliance with Opel and Canada's Magna as part of a plan to double Opel's production in five years, the head of Sberbank said.

State-controlled Sberbank, Russia's biggest lender, is partnering with Canadian auto parts group Magna in a deal to buy a majority stake in Opel.

The deal, which has yet to be finalised, was a precondition for the German government providing 1.5 billion euros in aid to the German car maker, shielding it from the bankruptcy of its U.S. parent company, General Motors.

Sberbank chairman German Gref, whose bank would get 35 percent of Opel in the deal, said AvtoVAZ's technology was far behind that of its peers and the firm needed to form an alliance that would address this problem in the next six months.

He said it could form such a partnership with Opel and Magna, or with French automotive group Renault, which already owns a 25 percent stake in AvtoVAZ.

"It either needs to go under Renault's management, or look for another option -- for example, with Magna and Opel," Gref told Russia's Channel One television.

"This has to get done in the next half year, and most likely, we will all come together and formulate a joint proposal," he said, referring to the Sberbank/Magna consortium that acquired Opel.

The preliminary deal between Magna and Opel parent GM, struck last month in coordination with the U.S. and German governments, included Russia's second-largest carmaker GAZ Group as an "industrial partner".

This has been widely understood to mean that it will convert at least some of its factories to produce Opel brand cars.

Analysts have said that Sberbank will likely transfer its Opel stake to Russian Technologies, the state-owned industrial holding, which would then combine it with other automotive assets into a new government-controlled giant.

Russian Technologies already holds a 25 percent stake in AvtoVAZ.

It is unclear how AvtoVAZ would fit in and how much leeway Sberbank would have to shift its stake.

Roland Koch, the premier of the German state of Hesse where Opel is based, said last week that Sberbank had free rein to sell its stake to GAZ but that other Opel shareholders would have to approve a sale to any other investor.

A German industry source told Reuters on Thursday that a number of longer-term scenarios could be envisioned, including an alliance with AvtoVAZ.

The German economy ministry, which has taken the lead in coordinating the Opel rescue, had no immediate comment on Gref's remarks.

Gref said Russia's ultimate goal was to make Opel into a conglomerate capable of producing up to 3 million cars per year.

"Today Opel makes about one and a half (million cars per year). The aim is to bring that up to at least three million in the next five years either through mergers and acquisitions or through significant expansion of capacity," he said.

Gref, whose bank has agreed with Magna to give Opel a 500 million euro ($697.8 million) cash injection, also repeated his position that Sberbank will not hold on to the Opel shares for long, and suggested his motivation in the deal was more political than economic.

"This is a fairly difficult, risky and unprecedented acquisition in Russia's history, one that for us is clearly not related to making a profit," Gref said.

"It is related to the drive to restructure our automotive sector, which is so weak and uncompetitive that I don't see any way for it to stay in the game without forming these kinds of alliances with the most modern firms," he said. ($1=.7165 Euro) (Reporting by Stephen Jewkes and Simon Shuster; editing by John Stonestreet, Rupert Winchester and Hans Peters)

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