Russian firms seen rushing to Ukraine.

02.07.2010

By Sujata Rao

LONDON (Reuters) – Russian firms are gearing up for corporate acquisitions in Ukraine after this year’s election of a more Moscow-friendly government in Kyiv, a lawyer involved in some of the biggest recent Russian M&A deals told Reuters.

Andrey Goltsblat, managing partner at Goltsblat BLP, a joint venture with UK law firm Berwin Leighton Paisner, said he is seeing an upsurge of inquiries from companies eyeing potential targets across the Ukrainian border.

“Ukraine has become more interesting because of the political situation. Russian businesses are looking for strategic M&A opportunities there. There are a number of discussions going on and we will be seeing some M&A deals soon,” Goltsblat said during a recent visit to London.

Goltsblat, whose firm has advised on Russian deals by foreign corporates such as Mars, Danone and LG, said banking, metals and telecoms were the sectors Russian companies are studying in Ukraine.

While no major deals have happened yet, Russia’s biggest lender Sberbank plans to buy a top-10 Ukrainian bank and Prime Minister Vladimir Putin has suggested a merger between gas monopoly Gazprom and Ukraine’s state-run Naftogaz, though such a move was ruled out by Kiev. Russian companies are also targeting expansion in oil-rich neighbour Kazakhstan, Goltsblat said, citing the prospective purchase by Sberbank of a stake in BTA Bank.

Russia’s TNK-BP is also in talks to buy Kazakhstan’s Pavlodar refinery and a number of Kazakh companies are expected to come up for privatisation.

Goltsblat said 2010 would see an increase from 2009 levels of M&A, but in contrast with past years when Russia’s cash-rich oil and metals firms prowled the world in search of buys, companies are now mostly seeking targets closer to home.

He said the financial crisis had reduced the attraction of Europe and the United States for Russian companies, as harsh austerity steps and huge debt burdens across much of the developed world mean sluggish or zero growth for years to come.

On the other hand, Kazakhstan’s economy is expected to grow by up to 7 percent this year, Russia by around 5 percent and Ukraine by around 4 percent.

“You can’t generate cashflow in Europe now,” he said. “The real opportunities are in Russia or in other emerging markets.”

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