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Siemens stalls a turbo-charged deal

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It was supposed be a model merger and the first significant tie-up outside the energy sector as Russian companies finally get serious about taking on industrial companies abroad. But the shareholders of heavy equipment producer OMZ left their prospective bride Power Machines waiting at the altar when they failed to show up to its AGM.

A few weeks later German engineering group Siemens confessed that it had made an offer for 71% of Power Machines? shares. It started to look as if Power Machines was not the jilted bride but had been consorting with the Germans on the eve of its wedding.

The combined OMZ-Power Machines would have been a major force in heavy equipment, with more than $1 billion a year in sales. Siemens is the world?s number two maker of power-station turbines but has failed to make any impact in Russia, whose domestically made gas turbines are sturdy, relatively efficient and cheap.

?The Russians prefer to use locally made equipment. The quality is not as good as the German-made stuff, but it is a lot cheaper,? says Stephen O?Sullivan, head of research at United Financial Group.

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