BUSINESS > Aselsan eyes Goldman Sachs after Chinese missile row

Cengizhan Çatal ASTANA - Hürriyet

After Merrill Lynch refused Aselsan’s request for it to advise its public offering, Goldman Sachs-Garanti Yatırım consortium is next in line for the deal

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Turkish defense firm Aselsan General Manager Cengiz Ergeneman says there won’t be delays in the company’s second public offering. Aselsan plans to go public between March and May 2014. AA photo

Turkish defense firm Aselsan General Manager Cengiz Ergeneman says there won’t be delays in the company’s second public offering. Aselsan plans to go public between March and May 2014. AA photo

Goldman Sachs is set to step into the breach after Merrill Lynch refused Turkish defense firm Aselsan’s request for it to advise and underwrite its public offering because of a missile deal inked by Turkey with a Chinese company under U.S. sanctions, according to Aselsan General Manager Cengiz Ergeneman. 

“If they are not in, there are other companies. There won’t be any delay in schedule. The company at the second rank is the Garanti Yatırım-Goldman Sachs consortium,” Ergeneman told daily Hürriyet in an interview in the Kazakh capital, Astana.

“If it is possible that you will work with the Chinese company, China Precision Machinery Export-Import Corp. (CPMIEC), we would not work with you,” said Merrill Lynch in a letter sent to Aselsan. 

Questioned by daily Hürriyet last week, Merrill Lynch confirmed that it had refused Aselsan’s offer due to Turkey’s missile deal with China, but declined to give further details of the letter said to have been sent to Aselsan. 

Fifteen percent of Aselsan has so far been offered to the public, and the company has been talking with several international consultancy firms ahead of its second public offering. Ergeneman stated that a portion of Aselsan’s shares was sold to foreign shareholders, while the rest of the shares were in the country. 

Two intermediary companies from Turkey and overseas need to form a consortium to complete the sale. “We picked 10 local and 10 foreign intermediary firms. We asked them to form a consortium with each other. We received five-six offers. The most appropriate bid was submitted by the Halk Yatırım-Merrill Lynch consortium,” he said before Merrill Lynch pulled out over fears that it could fall afoul of U.S. legislation if it has any business dealings with companies connected to CPMIEC, which is under sanction for violating the North Korea, Syria and Iran Nonproliferation Act. 

Aselsan plans to go public between March and May 2014, but they will determine the date with the intermediary firm, Ergeneman said, adding that Turkish Aerospace Industries (TAI) also planned to go public.

Turkey needs national missile

Ergeneman said Turkey should have a “national” long-range missile system, but Washington has expressed “serious concerns” over Turkey’s Sept. 26 decision to select CPMIEC to build the infrastructure. 

“If we want a system controlled by ourselves, we have to make it by ourselves. After completing a medium-level air defense missile, we will also make a long-range [system],” he said. “We will be dependent on the basic design of the system that we choose. Turkey’s engineering capacity is enough to do it.”

Turkish Technology Minister Nihat Ergün said last month that Turkey chose CPMIEC because it alone met Turkey’s demands for technology transfer and co-production.

“It wasn’t a technological point that put the Chinese firm forward. Turkey’s way of business has changed. We want a main technology transfer and the co-production of at least some parts in Turkey.
The reason for the selection was because the Chinese firm was ahead in the ease of technology transfer and accepted co-production,” Ergün said. The reason Ankara eliminated the other countries in the bid is that their offers were not reasonable and they did not accept Turkey’s demands, he added.
CPMIEC won the tender with a $3.44 billion bid, although the initial contract price was estimated at $4 billion.

The Chinese contender defeated a U.S. partnership of Raytheon and Lockheed Martin, offering the Patriot air defense system; Russia’s Rosoboronexport, marketing the S-300; and the Italian-French consortium Eurosam, maker of the SAMP/T Aster 30.


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Notice on comments

Georgios Milopoulos

12/13/2013 4:52:13 PM

It is hereby confirmed that as from today 13 Dec 13, Greek air defence system includes S300 RMU1 Russian missiles/ Not any problem with MATO or other allies policies has been noted, As from today there is not any ai force which can violate Greek airspace - IF GREEKS DO NOT WISH THIS TO BE HAPPEN Brgds and good luck.


12/13/2013 4:16:01 PM

Aselsan came into being when in 74 US congress placed embargo on Turkey and our soldiers could not even communicate with Korean relic radios. We shot at our own planes and sunk our own ships. US is the only strategic ally Turkey has, but still, US has hardly been a reliable ally. Too much ethnic politics involved, besides, we have to live in ME, they do not. Nothing wrong with searching other options, despite its political risks, this was a wise move.

dogan kemal ileri

12/13/2013 3:44:34 PM

If you agree with the USA not wanting to make technology transfer to Turkiye for the air defence system and you fear and are intimidated by all the sabre rattling going on because of Chinese preference by Turkiye, then you have no blood of the Turkish variety flowing through your veins. USA were thick as two planks and dirt poor till they found gold in California and Oil in Texas and they imported the brains from the rest of the world. Turkiye can do better we have rich history of success.

american american

12/13/2013 12:14:17 PM

just remember t.v. that china's old allies are now coming to america for help. ask the people of the mekong delta about china and there hydro electric plants. 1.5 billion people to feed, clothe, and car is a lot.

Red Tail

12/13/2013 10:38:35 AM

It is stated " Turkey’s engineering capacity is enough to do it.” But there are other questions to ask. How much will it cost? Would it have been better to use the engineering capacity for our export industry? Would it be better to use the money to have more teachers in out schools, better roads etc? Of course we can build the missiles ourselves. Any country in the world can do that, but at what cost? What sacrifices will we have to make in terms of poor roads, hospitals, schools, police etc.

Red Tail

12/13/2013 10:26:55 AM

Turkic. Be careful what to wish for. I am sure when/if we start working with China, you will start appreciating US a lot more. As for missile defence. Which countyr is currently protecting Turkey from misile attacks from Syria? Well, Germany and Holland are just about to leave and now to be replaced by US. Where was China here? And when/if the cooperation starts, you will hear remarkable stories of how it is to work with China, the problems, the delays, etc etc. So do not believe it will be easy

turkic voice

12/13/2013 4:45:13 AM

working with china would be my preference for turkey as this would even the world power stage a little further America is still the supreme power of the world which means its influence is greater then all if turkey can ignore this influence it shows a tipping point.
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