French carmaker Renault will pay over $1 billion for a stake of 25% plus one share in Russia's largest carmaker AvtoVAZ, a source said.“It will be over $1 billion, that is for sure,” he said.
The comment came a few minutes before the official signing of a deal between the French and Russian firms - one of the largest investments by a French company in Russia following last year's landmark deal between Total and Russian gas export monopoly Gazprom to develop the giant Shtokman field.
It would also become the largest ever investment by a foreign carmaker in Russia's auto industry, which has enjoyed a boom in recent years after almost all major carmakers have opened or committed to open new plants in the country.
Russia is enjoying a nine-year economic boom, spurred by record-high prices for its main export commodities, oil and metals.
Analysts and industry observers say Russia is poised to become Europe's largest car market in a few years as rising incomes boost demand for modern vehicles.
Renault will face a challenging task to revive the faded Lada brand, the main product of AvtoVAZ, a Soviet-era monster plant located in the town of Toliatti on the Volga river.
Renault has a 44% stake in Japan's Nissan and their alliance is the No. 3 car grouping in the world after General Motors and Toyota Motor. (Reuters)