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INTERVIEW - OT Logistics eyes acquisitions of inland transport firms in SEE

INTERVIEW - OT Logistics eyes acquisitions of inland transport firms in SEE Piotr Ambrozowicz; Source: OT Logistics

ZAGREB (Croatia), September 19 (SeeNews) - Poland's OT Logistics is scanning the market for potential acquisitions of inland transport firms in Southeast Europe after it increased its stake in Croatian port operator Luka Rijeka [ZSE:LKRI], OT Logistics vice president, Piotr Ambrozowicz, told SeeNews. 

"We may strike strategic partnership agreements with local companies, but we may decide to conduct M&A transactions should we decide that reaching synergies or operating goals is only possible via M&A," Ambrozowicz said in an e-mailed interview with SeeNews earlier this week. 

OT Logistics said last week it plans to launch a takeover bid for Luka Rijeka after it acquired an additional 11.75% stake in the port operator through a block deal on the Zagreb Stock Exchange. Following the acquisition, the shareholding interest of OT Logistics in Luka Rijeka has increased to 32.56%.

Increasing the stake in Luka Rijeka is in line with the strategy of OT Logistics Capital Group, which targets becoming the leading transport and logistics company in CEE, developing port terminals and becoming the leader in servicing agricultural products in the Adriatic and Baltic Sea basin (excluding Russia), Ambrozowicz said.

One of the key goals of the group is to create the Baltic-Adriatic route and provide clients in the region (on CEE markets such as Hungary, the Czech Republic, Slovakia and Serbia) with a comprehensive logistics offer covering both port services as well as inland transport services, he added.

On Monday, the Polish company said it signed a cooperation agreement with two other shareholders of Luka Rijeka, Croatian pension funds Allianz ZBand Erste Plavi, that will enable OT Logistics to operationally manage the Croatian port. Allianz ZB and Erste Plavi control 15.15% and 8.85% of Luka Rijeka’s shares, respectively. Together with OT Logistics, they will control 56.56% of Luka Rijeka’s equity.

"The recent shareholder agreement will allow us to take over operational and financial control of the company, which should facilitate reaching the goals we set to achieve with regard to the Rijeka port," Ambrozowicz said.

"We want to increase the volume of transhipments in Rijeka and make the port an important point of the Baltic-Adriatic transport corridor. In order to do so, we want to improve the quality of infrastructure linking the Rijeka port terminals. We are also looking forward to improving the railway connection of the port to the mainland, but this is outside of our scope as we are not the owner of the railway infrastructure."

Rijeka port has two single-track railway connections, linking it to Slovenia's Pivka and the Croatian capital of Zagreb. The port operates several terminals, including a bulk cargo terminal with an annual capacity of 4 million tonnes, as well as general cargo, container, ro-ro, timber and frigo terminals. The port's cargo traffic increased to 2.4 million tonnes in the first half of 2017, up 35% year-on-year.

"We want to ensure that we are able to provide our clients with a comprehensive service of shipping goods from the port to their doorstep. This requires using a multi-modal shipping structure," Ambrozowicz noted. Therefore, the company is interested in acquisitions as it wants to develop its business. At the same time, OT Logistics will carefully analyse potential takeovers as they need to bring value to the company and, eventually, to its shareholders, he added.

In December, OT Logistics placed the sole bid in a tender for the sale of a 30% state-owned stake in Luka Bar, the operator of Montenegro's Bar seaport. OT Logistics proposed to pay 8.52 million euro ($10.2 million) for the stake. In January, Montenegro said it has received a single binding bid in a tender for the sale of 51% of reilway freight operator Montecargo. The bid of 2.5 million euro was also placed by OT Logistics. The Polish company also committed to conducting an investment programme worth a total of 17.45 million euro.

However, Montenegrin transport minister Osman Nurkovic said in April that the government has terminated the talks for the sale of Luka Bar and Montecargo to OT Logistics as the selected privatisation model was not in the best interests of the seller. 

"This came as a surprise to us as we had not earlier received any signals that cancelling the tender was an option. We appealed and maintained the will to finalize the deal, but our appeal was rejected," Ambrozowicz said. "It is hard to say at present what are the chances for the transaction to take place".

THE EFFECTS OF POSTED WORKERS RULES CHANGE 

Earlier this year, French president Emmanuel Macron questioned the European Union’s rules on posted workers that allow companies to send employees to work in another EU member state while continuing to pay benefits and taxes in their home country.

Macron blamed the rules for creating conditions for 'social dumping', benefiting companies with lower costs based in central and eastern Europe. However, the potential change of the regulations has drawn fire from many central and eastern European states, including Poland. In August, Polish prime minister Beata Szydlo said maintaining the existing regulatory framework was in the interest of Polish workers.

During a meeting with Macron in August, Bulgarian prime minister Boyko Borissov said the discussions on the Cohesion Policy should go in parallel with the negotiations on posted workers so as to raise the standard of living in SEE, including in the Western Balkans. 

In the opinion of Ambrozowicz, the company does not see a major impact of such potential changes on the business of OT Logistics. "We are strong proponents of the EU single market and its basic freedoms: freedom of movement of capital, goods, services and people. An overly protectionist approach will eventually pose a risk for European growth and attacks the very foundations of the EU," Ambrozowicz noted.

As for the potential impact on the SEE region’s logistics sector, the changes should not bring a revolution due to the fact that wage discrepancies within the region’s EU members are not that large, Ambrozowicz said. Still, freight firms which operate on the German or French markets may see an increase in their cost base, he added.

($ = 0.833824 euro) 

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