On August 20 FESCO Transport Group (RTS: FESH/FESHG) and Commercial Port of Vladivostok (RTS: VMTP) held a joint press conference, where parties announced the final agreement to enter into the transaction, after which FESCO will own 100% of M-Port Ltd, the entity which in turn owns 95.2% shares in OJSC “Commercial Port of Vladivostok”.
The transaction is structured in two stages. At first stage FESCO is to acquire 50% share in M-Port Ltd for USD 90 mln. This 50% share was previously owned by Magnitogorsk Metallurgical Plant. Acquisition will be funded from the proceeds of recently completed FESCO additional shares issue.
At the second stage partners have agreed that FESCO will acquire the remaining 50% stake in M-Port Ltd. The agreed time horizon for the second part of the acquisition is within the next 3 years, the price is pre-agreed by partners as a formula, related to the port financial performance. In addition, partners in the transaction have agreed on the possibility and terms at which current shareholders in the Commercial Port of Vladivostok may become shareholders in FESCO.
Upon completion of this transaction FESCO Group will include port facilities in all three major marine gateways of Russia: Baltic, Black Sea and Pacific, thus making yet another important step in its strategy of setting itself as a national champion in integrated logistics and container operations.
According to FESCO Chairman of the Board Siman Povarenkin, “this acquisition is much more to FESCO than a financial investment. This is a long-term strategic alliance with one of the key ports in the Russian Pacific. The port, we are sure, has bright future, and the alliance between FESCO and VMTP would help release obvious synergies. We will actively work together with our new partners on further developing the port, build new terminals, bring more cargo».
The port will be co-managed by FESCO and the existing management team. VMTP CEO, Vyacheslav Pertsev, added: «We have common and converging views with FESCO on the strategy of port development. An important element of our cooperation will be a better integration of the port into FESCO intermodal logistical solutions. Together, we will offer clients even more attractive and efficient service in such areas as container operations, cars transportation, to name just a few”.
The transaction is structured in two stages. At first stage FESCO is to acquire 50% share in M-Port Ltd for USD 90 mln. This 50% share was previously owned by Magnitogorsk Metallurgical Plant. Acquisition will be funded from the proceeds of recently completed FESCO additional shares issue.
At the second stage partners have agreed that FESCO will acquire the remaining 50% stake in M-Port Ltd. The agreed time horizon for the second part of the acquisition is within the next 3 years, the price is pre-agreed by partners as a formula, related to the port financial performance. In addition, partners in the transaction have agreed on the possibility and terms at which current shareholders in the Commercial Port of Vladivostok may become shareholders in FESCO.
Upon completion of this transaction FESCO Group will include port facilities in all three major marine gateways of Russia: Baltic, Black Sea and Pacific, thus making yet another important step in its strategy of setting itself as a national champion in integrated logistics and container operations.
According to FESCO Chairman of the Board Siman Povarenkin, “this acquisition is much more to FESCO than a financial investment. This is a long-term strategic alliance with one of the key ports in the Russian Pacific. The port, we are sure, has bright future, and the alliance between FESCO and VMTP would help release obvious synergies. We will actively work together with our new partners on further developing the port, build new terminals, bring more cargo».
The port will be co-managed by FESCO and the existing management team. VMTP CEO, Vyacheslav Pertsev, added: «We have common and converging views with FESCO on the strategy of port development. An important element of our cooperation will be a better integration of the port into FESCO intermodal logistical solutions. Together, we will offer clients even more attractive and efficient service in such areas as container operations, cars transportation, to name just a few”.