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. Last Updated: 07/27/2016

Kamaz Shares Up on Hopes of Daimler Stake Raising

The Federal Anti-Monopoly Service on Friday denied reports that Germany's Daimler had applied to raise its stake in loss-making truckmaker KamAz, but investors retained hope the deal could happen.

Russian carmakers, hit by slumping demand during the country's first recession in a decade, are increasingly looking to foreign partners to revitalize the sector and persuade Russians their vehicles are as good as ones made abroad.

Traders and analysts said greater involvement from Daimler would boost performance and save Russia's largest truckmaker from coming under state control.

KamAz shares jumped 25 percent on the original report by Russia news agencies that Daimler was seeking to raise its 10 percent stake, but retained most of the gains after the denial from the anti-monopoly body.

"There is no request to buy a stake in KamAz," Irina Kashunina, spokeswoman for the service, said.

"But there is a request from a company ... affiliated to Daimler to increase a stake in Fuso KAMAZ Trucks Rus," she added, referring to a joint venture between KamAz and Daimler set up this month. The request was granted.

KamAz and Daimler declined to comment.

KamAz on Thursday reported a 2 billion ruble ($68 million) first-half loss, as the recession battered the construction and cement industries, which provide most of its clients.

"They could get access to some newer technologies [from Daimler], modernize. And it's not just technologies, it's also management experience," said Vladimir Bespalov, analyst at VTB Capital.

"The hope [that Daimler will increase its stake] remains, this possibility exists, although if it is realized, it is more likely not to happen in the near future."

AvtoVAZ is seeking new ventures with shareholder Renault and Sberbank is looking for domestic industrial partners to assemble cars in Russia after a planned purchase of a stake in Germany's Opel.

Daimler, which signed a $250 million deal to acquire 10 percent of KamAz last December, has an option to increase its stake to 23 percent.

But the German company has felt the effects of the global economic crisis, and losses at KamAz led investors to think that Daimler may not exercise that option.

Instead, KamAz looked set to come under state control, with sources saying last month that state conglomerate Russian Technologies is in talks with investment bank Troika Dialog to acquire a 13 percent stake that would give it control.

"On this news [of a Daimler stake increase], people decided to lift KamAz's shares, betting on long-term cooperation between KamAz and Daimler and, consequently, on the improvement of its performance," Infina's trader Yevgeny Volkov said.

Yuliy Matevosov, analyst with Aton, said the market was anticipating that Daimler would pay the same price for the 13 percent stake that it paid for the 10 percent stake at the end of last year, with the deal potentially coming to $325 million.

Shares in Daimler, which sold off on its original stake purchase in KamAz, were down 1.6 percent by Friday afternoon, slightly underperforning a 0.8 percent fall on the DAX.