On July 25, 2008, it became known that the Kamaz truck company might sell its 42% share package to Daimler AG, its strategic investor. As planned, Kamaz would be incorporated into Daimler Trucks, a Daimler AG unit with a focus on truck production. The German concern has been granted the exclusive right to hold the negotiations. The preliminary price of the share package has not been disclosed.
In early April, Interfax cited a Kamaz source as saying that the company had considered selling its blocking package of shares to a strategic investor at a price that would be in line with its market cap of USD 5 billion. Several well-known international truck companies were cited as potential strategic investors.
We are upbeat on the news. The deal would be done at a fair price if it is closed on the terms indicated above; and company's fair price exceeds its current market value. We believe that the deal could act as an upside driver for the company's stock valuations, pushing them up to fair levels. What is more, the deal would give the truck-maker access to its partner's production technology, enabling it to expand its model range and improve the quality of its vehicles. Daimler AG, for its part, would gain access to Russia's rapidly growing truck market, about a third of which is now controlled by Kamaz.
We estimate the fair value of one common share in Kamaz at USD 6.95 per share, with an upside potential of 26.5%, which corresponds to a BUY recommendation.
0.569
0.073
