The Federal Anti-Monopoly Service has approved the applications of the first two applicants under Russia’s new strategic industries law – Alenia Aeronautica (parent = Finmeccanica) and Archangel Diamond Corporation (parent = De Beers). As I wrote before, these deals had already been approved by then-President Putin, and thus are not the ideal ‘test cases’ for the law. Nevertheless, it is a good signal to send investors in this highly challenging environment. One can only wonder whether Russia can afford to disapprove any deals at this point? If I were a foreign company trying to acquire a Russian company in a strategic industry covered under the law, I would put in my application now while the Russian government is still in a placating mood.
Update #2: Vedomosti is reporting that the evaluation of the two applications was very anti-climactic – no arguments and only lasting 20 minutes. Again, this is most likely due to the fact that the deals were previously approved before the strategic industries law came into effect. The paper also reported that the Commission will review 3-5 more applications by the end of the year, out of the ten applications currently pending with the FAS. PM Putin will reportedly lead this next session, in which the Commission will examine the question of whether the Commission’s approval is required for a deal by a Russian holding company that is led by a foreign company, even if the foreign company is not involved in the holding company’s main activities. This may or may not have something to do with the desire of Sibur Holdings’ management to purchase Sibur shares from Gazprombank through Hidron Holdings, a Cypriot company. In any case, the next sitting of the Commission should provide a much better test of the law’s application, and hopefully will be more dramatic.