They didn't try Shark Tank?
Posted on 10/07/2013 6:48:21 PM PDT by nickcarraway
Russia’s largest weapons producer has struggled to be profitable in the post-Cold War years, and now 49 percent of the Kalashnikov Group will be sold to private buyers for nearly $41 million.
Despite three years of trying to overcome Kalashnikov's debts, state shareholder Rostec will sell its 49 percent stake to private investors, Vedomosti newspaper reports. The reported buyers are two businessmen affiliated with the Russian operator of airport link Aeroexpress, Alexey Krivoruchko, and part owner Andrey Bokarev.
Bokarev is also the co-owner of TransMashHolding, a rail and transport company, as well as Kuzbassrazrezugol, a coal company, and Moscow Metro Department.
It was conditional the investors be Russian nationals, and the two men have already pledged to invest an additional $78 million over the next two years to pay off debt of the AK-47 producer, which makes up 95 percent of Russia's light weapons.
Bokarev picked up the shares because he has a "financial incentive" and Krivoruchko sees the investment paying for itself in five years. The two will lead the creation of future joint ventures with foreign partners in producing gunpowder and ammunition.
AK-109 Kalashnikov assault rifle. (RIA Novosti / Vladimir Vyatkin)AK-109 Kalashnikov assault rifle. (RIA Novosti / Vladimir Vyatkin)
The deal was approved by President Vladimir Putin as well as the Ministry of Industry after meeting with Sergey Chemozov, CEO of Rostec.
The public-private partnership is “the most effective model to reform the industry,” according to Chemozov, as reported by Vedomosti. The turn to private investors is part of Kalashnikov’s overall strategy through 2020, developed jointly by Rostec and the Ministry of Industry and Trade
Production output sharply decreased after the end of World War II, and again after the Soviet Union collapsed, and has struggled on the modern market.
The Kalashnikov Group was established in August 2013, after the Izhevsk plant (Izhmash), a former producer of the iconic AK-47 assault rifle was declared bankrupt a year earlier. The Kalashnikov Group was formed in a merger between Izhmash and Izhevsk Mechanical Plant.
The Kalashnikov Group currently operates in Tula, south of Moscow, and Izhevsk, located in the Urals, home of the original designer Mikhail Kalashnikov. Production could triple and reach 1.9 million units per year, and has the potential to boost sales revenue to more than $750 million.
Mikhail Kalashnikov, the designer of the world’s iconic firearm transferred the brand rights to the newly formed weapons venture. The brand is estimated to be worth $10 billion.
Kalashnikov, 93, was a tank commander in World War II, and developed the AK-47 to counter German assault weapons.
General Mikhail Kalashnikov never saw nor will he ever see one kopeck’s worth of royalties from his design.
Heck, a few years ago there were full page ads in the American Rifleman for “Kalashnikov Vodka”.
Too bad, comrade.
I’m confused. With the international weapons ban in place, who are they going to sell these weapons to?
Eugene Stoner (M-16) and Kalashnikov studied each others designs and incorporated concepts they liked into their respective weapon systems. Stoner more so than Kalashnikov. They became friends after meeting at European weapon shows. Kalashnikov would joke about all the money Stoner made with his weapon systems and how little he made, living in a modest home outside Moscow. In fact as time went on Stoner would sponsor Kalashnikov's attendance at weapon conventions in Europe. Stoner died of cancer in 1997.
Perhaps Kalashnikov, in his advanced years, will finally see significant monetary gain from his weapon system.
A bunch of years ago I had just gotten back from shooting in a local avacado field with my buds to an apartment I was renting when I saw a cable guy good old boy disconnecting somebody.
I asked him who he was disconnecting, and he basically said none of my business.
Ok with that, I popped my trunk and pulled out my Norinco with the milled stock and a case of beer and walked on by.
He was whiter than Michael Jackson
One thing to be said for current production Russian ammo, it runs well through Combloc guns that were designed for it. There are two major manufacturers imported here. Wolf brand made at Tula Cartridge Plant[Russia]. Brown/Silver/Golden Bear made by Barnaul Machine Plant [Russia]. All ammunition is steel cased, noncorrosive, and Berdan primed. Wolf ammo is polymer coated. Brown Bear is brown lacquer coated. Silver Bear wears a zinc wash. Golden Bear wears a brass wash. U.S. manufacture self-loading pistols and rifles may or may not like the steel cased ammunition. It is best to try samples to see if your firearm will function reliably with steel cased ammunition.
Brilliant post!
I especially appreciate the irony of that situation. Sell us the rope to hang you with indeed.
I'll have to run a box through some "borrowed" firearms to chech it out again.
Капиталисты продадут нам веревку, на которой мы повесим их. -Владимир Ленин
(The Capitalists will sell us the rope with which we will hang them. - Vladimir Lenin)
Russia’s largest weapons producer has struggled to be profitable in the post-Cold War years, and now 49 percent of the Kalashnikov Group will be sold to private buyers for nearly $41 million.
Mikhail Kalashnikov, the designer of the world’s iconic firearm transferred the brand rights to the newly formed weapons venture. The brand is estimated to be worth $10 billion.
Now I realize the Kalashnikov firm is in debt, but there is no way 49% of it could be sold for a mere $41 million if the brand itself is worth $10 billion. The math just doesn't work. And for good reason. There are hundreds of thousands of unused mint condition AK-47/AK-47M/AK-74 rifles sitting in arms depots all around the world. Not to mention the million or more used variants still in use and available for sale. The family and similar variants are still manufactured in a dozen or more countries. No way is the AK-47 brand worth anywhere near $10 billion.
I hope it serbs you well
Clap, clap, clap.
I believe that Kalashnikov designed the AK at Kovrov, not Izhevsk.
Anyone they want to sell them to, while they’re telling the UN to GFY. Why can’t we do the same?
Does anyone know who owns the remaining 51%?
http://www.amazon.com/The-Gun-C-J-Chivers/dp/0743270762/ref=sr_1_1?ie=UTF8&qid=1381205920&sr=8-1&keywords=the+gun+chivers
Rostec is the Russian state arms corporation, so essentially its the Russian government. In other words a semi-legal organized crime syndicate with Vladimir Putin as the godfather.
They didn't try Shark Tank?
Yeah, unlike our Boy Scout-like Goo-goo (good government) masters, such as Valerie Jarrett, Barack Obama, Rahm Emanuel, Jerry Brown, John McCain and the rest.
I doubt he did get any money from the design. Ditto for John Garand. “For his work with the Springfield Armory, Garand was awarded the Meritorious Service Medal in 1941, and the first Medal for Merit (together with Albert Hoyt Taylor) on March 28, 1944. Garand never received any royalties from his design. A bill was introduced in Congress to award him $100,000 in appreciation, but did not pass. Garand remained in his consulting position until his retirement in 1953, and died in Springfield, Massachusetts in 1974.
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