OREANDA-NEWS. September 16, 2011. Yesterday, the Federal Antimonopoly Service approved Highstat Ltd’s request to buy 29.7% of Power Machines, effectively allowing the company to increase its stake to 100%. We note that official approval was necessary for Highstat as it plans to buy out Siemens 25% stake in Power Machines.

Bottom line

We view the news as moderately positive for Power Machines as Highstat now seems to have gained all the necessary regulatory approval to proceed with buying out Siemens’ stake in Power Machines.

We recall that on 1 Aug, Power Machines announced that Siemens would sell its 25% stake in the company to Highstat Ltd, a structure owned by Alexei Mordashov, the ultimate controller of Power Machines. The price of the stake was not disclosed.

A voluntary buyout offer is now possible: once the deal is completed, Highstat Ltd will control 95.3% (70.3% + 25.0%) of Power Machines’ capital. Under Russian law, any party which consolidates 75% of a company’s capital must organise a voluntary buyout of minorities.

The voluntary buyout price is the higher of the weighted average share price for the previous six months or the price paid when 95% of the shares were consolidated. According to Bloomberg the weighted average price of Power Machines is RUB8.22/share or 19% higher than the current price (RUB6.90).

The controlling shareholder also has the right to organise a squeeze-out of minorities within six months of the voluntary buyout if he controls more than 95% of the company’s capital. The squeeze-out price is the acquisition price or the preceding voluntary buyout price, whichever is higher.