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HMS Group to Acquire Pump Manufacturer Bobruisk Machine Building Plant

HMS Group, the leading pump manufacturer and provider of flow control solutions and related services in Russia and the CIS, announced Friday that it has entered into a share subscription agreement for an acquisition of a stake in Bobruisk Machine Building Plant.

In accordance with the agreement, the company undertook to subscribe for 100% of newly issued shares equal to 57% of a share capital of Bobruisk Machine Building Plant, located in Bobruisk, Belarus – one of the largest manufacturers of specialist centrifugal pumps in the CIS - for a total cash consideration of US$9.6 million.
Completion of the agreement is conditional upon actual holding of the Plant’s shareholders meeting and their approval of the public offering, as well as upon permission and state registration of the offering on behalf of an authorized governmental body of the Republic of Belarus.
HMS Group will pay total cash of US$9.6 million for 100% of newly issued shares equal to 57% of the share capital of the Plant. The transaction will be fully financed with available debt capacity. All funds invested in the Plant will be used for the development of new product lines and purchase of relevant new equipment.

HMS Group acquires the Plant under authorization of the Belorussian government, and is considered to be a strategic investor. The acquisition is expected to be closed in autumn 2011.
Artem Molchanov, Managing Director (CEO) of HMS Group, commented that the firm continues its development in accordance with the strategy, presented during the IPO.
With the intended acquisition, taking into account its marketing and R&D capabilities, HMS Group will be able to substantially increase revenues of the Plant, to broaden its company’s product portfolio, and to provide its clients with more integrated solutions in oil refining and petrochemicals, said Molchanov.

With the intended acquisition, HMS Group will enter the “hot cycle” oil refining pumps and related equipment market, and acquire new technologies. The Plant complements the existing business of HMS Group in “cold cycle” oil refining pumps.
The Group will significantly increase its market shares in the segments of pumps for oil refining as well as for metallurgy and mining applications.

Oil refining and petrochemicals is one of the largest markets for pumps in Russia with an estimated market size of around US$107.2 million and expected CAGR 2011-2015 of 15.8%2. The market offers strong growth potential in the modernization of existing refineries as well as new objects constructions.

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