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. Last Updated: 07/27/2016

Mercedes-Benz, UAZ Set For $450 Million Deal

Mercedes-Benz and the Ulyanovsk automobile factory expect to agree next month on a $450 million joint venture to produce jeeps, minitrucks and minivans, officials of the two companies say.

Under the deal, two automobile factories would be set up at UAZ, as the Ulyanovsk plant is commonly known, where the plant currently produces military-style jeeps. One factory would assemble vehicles; the second would eventually produce engines, UAZ deputy general director Vladimir Antonov said in an interview Wednesday.

The joint venture, located 700 kilometers east of Moscow, would produce three types of vehicles: four-wheel-drive off-road vehicles; minitrucks; and a variety of minibuses, including ambulances and mobile intensive-care units, Antonov said.

The total value of the project would amount to 700 million Deutsche marks ($450 million), according to Mercedes-Benz's Moscow press spokeswoman Emma Vasyilkova.

A final decision on the deal, which according to Mercedes-Benz officials would be the biggest European investment project in Russia, is expected by the end of September, officials said.

Senior Mercedes officials were in Ulyanovsk last week at the head of a delegation of more then 20 large German companies and confirmed a protocol of intent with UAZ signed last November.

Components for the production of automobiles would initially be supplied by Mercedes-Benz, but UAZ hopes to take over the whole production cycle at a future stage, Antonov said. Representatives of Boesch and Hearst, which manufacture parts for Mercedes-Benz automobiles, were present last week and discussed setting up production of automobile parts at Ulyanovsk.

According to Antonov, Mercedes-Benz and the Ulyanovsk plant would each hold a 30 percent share in the joint venture. The remainder would be distributed between the World Bank, the European Bank for Reconstruction and Development and a variety of Russian investors.