Romanian manufacturer of PVC pipes and fittings TeraPlast [BSE:TRP] said that it is selling its window profiles business to local peer Dynamic Selling Group for 4.5 million euro ($5.47 million).
The decision comes as a result of TeraPlast’s strategy to expand to new businesses and markets, TeraPlast said in a statement filled with the Bucharest Stock Exchangem BVB, on Friday evening.
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The transfer will be made after obtaining the Competition Council’s approval.
TeraPlast has been in talks with two companies – the world leader in the field and the Romanian producer Dynamic Selling Group.
"The window profiles business was the only business in the Group where we were not in the top two players in the market. Our strategy was and remains to be number 1 or 2 on any of the markets in which we operate," TeraPlast CEO Alexandru Stanean said.
"With our partners from Dynamic Selling Group we analysed three options: acquiring the business, a merger of our profile businesses or selling this business to them. Under similar financial coordinates we decided to sell the window profiles business to the number one manufacturer in Romania," he added.
"We are confident that following this investment they will become leaders on a market with over 20 competitors, most of them strong producers from abroad. We chose to focus on developing other areas of TeraPlast’s business," Stanean also said.
Dynamic Selling Group was established in Galati in 2004 and has 247 employees active in manufacturing and distribution of window profiles for thermal insulating carpentry, data from the finance ministry shows.
TeraPlast is the parent-company of TeraPlast Group, which comprises several business lines: installation, PVC joinery profiles, compounds, thermal insulating panels, windows, doors and metallic tiles. The group's seven companies are TeraPlast SA, TeraSteel Romania and Serbia, Wetterbest, TeraGlass, TeraPlast Recycling and TeraPlast Hungary.
In the first nine months of 2020, TeraPlast Group registered a 14% increase of the turnover, up to 167 million euro, and a 46% increase in EBITDA, up to 20 million euro.
The window profiles represented 9 million euro in TeraPlast’s turnover in the first nine months of 2020. The distribution network of this business line includes over 200 clients, thermal insulating carpentry producers as well as the TeraPlast Hungary company.
TeraPlast's shares traded 3.88 lower at 0.4210 lei ($0.1/ 0.08 euro) as at 1038 CET on Tuesday on the Bucharest Stock Exchange.
($= 0.8231 euro)