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Kremlin To Drop Control Over AK-47 Company

The Russian gun manufacturer responsible for the AK-47 will no longer be owned by the Kremlin after an ongoing corporate restructuring concludes.

News releases state that the company, Kalashnikov Kontsern, is set to be sold, resulting in investor Aleksei Krivoruchko holding the controlling stake, The New York Times reports.

While Kalashnikov Kontsern still sells to the Russian army, the company has diversified its operations and now sells arms to civilians, creates drones and offers a clothing line. The company has also moved into producing electric motorcycles. The AK-47 by far has been its most successful product. There are an estimated 100 million AK-47s worldwide.

The Kremlin’s stake up to this point was represented in a state holding company named Rostec. Rostec sold less than 50 percent of its stake in Kalashnikov in 2013, but now the Russian government will let Rostec sell another 26 percent of its stake, effectively making Kalashnikov a private entity.

With Rostec and other investors selling their shares, Krivoruchko will hold a 75 percent stake in Kalashnikov, which boasted sales of $308 million in 2016 and a profit of $51 million.

That profit margin exists despite sanctions slapped on Russia in the aftermath of Russia’s invasion of Crimea, which has prevented sales of imported Kalashnikov Kontsern weapons in the United States.

To make up for lost sales, the company has signed a licensing agreement with Saudi Arabia, a U.S. ally, to produce the AK-103 variant in Saudi Arabia.

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