Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Siberian Aluminum Buys Up Tank Firm

He was an aluminum tycoon. Then he added the nation's second-largest car factory to his books.

Now Oleg Deripaska — the man in the driving seat of Siberian Aluminum — is spreading his tentacles into the arms business.

Having last month taken over GAZ, located in the Nizhegorod region, Siberian Aluminum has strengthened its grip over GAZ subsidiary Arzamas Machinery Works.

The works is in the Upper Volga city of Nizhny Novgorod.

According to the works' web site,, it produces parts for automobiles to armored vehicles, which make up about 50 percent of its output.

At an extraordinary meeting held Saturday, Siberian Aluminum won a majority of seats on the works' board, shifted more powers to new directors from shareholders and voted a share issuance that will reduce minority stakes to 19 percent from a margin below 50 percent.

"We will understand the meaning of these moves later," said Alexander Volkov, head of investor relations with Arzamas Machinery Works.

The board was packed with acolytes of Siberian Aluminum, who took five seats out of seven, up from the three seats GAZ used to hold for its representatives.

The power to appoint the works' director general, formerly in the hands of shareholders, became the responsibility of the board, while his term was reduced from five years to three years.

Minority owners could have, in theory, blocked the changes but they were afraid.

The company's charter had allowed for the issuance of 120,000 shares in addition to the 305,000 already in circulation, but Siberian Aluminum raised the amount of prospective issuance to 500,000 shares.

This, if carried out, will reduce stakes of minority shareholders to 18.75 percent from the current 50 percent minus one share.

In theory, the minority shareholders could have blocked changes to the charter, but they did not do so, fearing retaliatory measures from Siberian Aluminum-owned GAZ, whose monthly purchases from the works stood close to 30 million rubles ($1.1 million) last year.

Tellingly, Siberian Aluminum did not wait even two months until the annual shareholder meeting takes place at Arzamas.

The company posted a profit of 68 million rubles on sales of 796 million rubles in January-September 2000, up 93 percent and 40 percent year-on-year, respectively.

"It is clear that the new shareholders tried to get a hold over the company as soon as they could," Volkov said.

Earlier, GAZ director Nikolai Pugin said Siberian Aluminum would create a holding company that would include GAZ, the Pavlovsk Bus Factory, the Arzamas Works and Kommash factory, a maker of equipment used in the municipal-housing industry.

Officials at both GAZ and Siberian Aluminum refused to comment on the shareholder meeting results, but called Pugin's statements about the holding company premature.

"It may happen some day, but at the moment it is just pie in the sky," said Alexei Drobashenko, spokesman for Siberian Aluminum.

It is likely that one of the first moves in the course of corporate restructuring implemented by the new owners will be a crackdown on social payments.