Profitable Deal

22.09.2008 (13:28)

Finnish logistic company Itella Logistics’ acquisition of National Logistic Company (NLC) is closed.

Investment fund Citigroup Venture Capital International (CVCI) and consortium “RosEuroGrupp” are the sellers. RosEvroGroup continues to keep full control over customs clearance and brokerage business and hold 10 percent. “Itella Corporation will control 90% of warehouse and transport logistics, RosEuroGrupp will own 10%”, Nikolay Artemenko, President of NLC, confirmed. He noted that the main purpose of the integration with Itella Logistics is the improvement of the client service using new technologies and solutions.

The acquisition agreements were signed at the end of April this year. The closing of the acquisition took place after the passage of all necessary procedures and obtaining merger approvals by Russian FAS (Federal Antimonopoly Service). Sum of the deal may amounts to EUR 200 mln.

Nowadays, NLC controls 480,000 square meters of warehousing spaces, including 200,000 square meters in its own premises. Thus, NLC owns five objects in Moscow region, and one objects in Saint Petersburg, Ekaterinburg, Rostov-na-Donu, Samara and Novosibirsk. The company plans to control 600,000 square meters of warehouses by the end of 2008.

Finalization of the transaction allows Itella Logistics to start the integration process with NLC, and to develop the new Itella-NLC brand in the Russian market. Vesa Vertanen, Senior Vice President of Itella Corporation and Head of Itella Logistics Business Unit will manage acquisition process. Itella Logistics will own 1 mln square meters of warehouses in 8 countries.

According to Nikolay Ditsman, Head of marketing department of Eurasia Logistic company, price of the owned area is $1,400 for 1 sq. m. “In 2007 demand on warehousing places outstripped supply many times over. Through NLC acquisition we will gain competitive advantage because companies will supplement each other, increasing the quantity of services and client base. The deal will reinforce the position of Itella Logistics as one of the strongest logistics operators in Northern Europe and make it a one of the market leaders in the rapidly growing Russian logistics market. Itella Logistics will provide and develop further logistics services throughout Russia via its extensive logistics centre network and transport connections, Mr Vertanen, Head of Itella Logistics Business Unit commented”, Mr. Vertanen said.

Maxim Shakirov, Head of the department of industrial storage real estate of Colliers International company said that this is important deal for the market, European operator purchases Russian logistic company for the first time. N. Ditsman agrees with him.

This deal may lead to creation of new strong operator and new investments, especially as NLC has effective base in the field of logistic services, clients and experience of creation of regional warehouse centers.

“Western manufacturing and trade companies enter Russian market and they need logistic service. Therefore the companies servicing them all over the world will work here”, Alexandr Severilov, General Director of the Partner Logistic company, thinks.

Large western companies come to Russia. It is not secret that many Russian businessmen developed their companies in such way that they interest western partners. Maybe this merger has a similar story.

by Yaroslav Novgorodsky

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