Poland's PKP Cargo eyes freight carrier takeovers after IPO
WARSAW (Reuters) - Rail freight carrier PKP Cargo will use its planned debut on the Warsaw bourse this year to boost its No. 2 position in the European Union and then look for acquisitions to take on market leader Deutsche Bahn, its CEO said.
PKP Cargo, fully owned by Polish railways PKP, has around half the local market, Europe's second biggest after Germany. Deutsche Bahn's DB Schenker controls around 20 percent, but on a European scale is three times PKP Cargo's size.
"Our ambitions do not end with the Polish market," PKP Cargo's Chief Executive Lukasz Boron told Reuters in an interview. "In the future, we don't exclude being selectively interested in carriers around the region."
"Most of all, we're looking at markets, where we already operate, which besides Poland include the Czech Republic, Hungary, Slovakia, Austria, Germany and Belgium."
State-controlled PKP plans to float around half of the Cargo unit before the end of the year in an initial public offering (IPO) said to be worth around 2 billion zlotys ($632.2 million), likely to be the largest IPO in Warsaw this year.
PKP wants to cut its debt pile with the sale. Cargo has almost no debt and does not plan new shares in the IPO, deeming its last year's core profit EBITDA of 767 million zlotys and net profit of 267 million enough to keep it on track for takeovers.
Besides the big two, the Polish freight market is divided among almost 50 other players, with carriers owned by state-controlled refiners PKN Orlen PKN.WA and Lotos LTSP.WA as well as copper miner KGHM KGH.WA among possible targets.
Last year, PKP Cargo carried 116 million tonnes of goods, securing the No.2 spot in the EU and providing 5.2 billion zlotys in revenue. However, only two percent of that figure came from outside Poland.
"I would like PKP Cargo to become a central European champion in a few years, with a strong position in the region," PKP Cargo CEO said. "We want the income from freight business beyond Poland to be a significant part of our revenue."
PKP Cargo, the first railway company to be listed in Warsaw, has already filed its IPO prospectus at the Polish regulator's, with only trade union demands clouding the pre-debut picture.
The group has offered its 24,000 workers a three-year employment guarantee and a one-off payment that will cost 120 million zlotys. Unions are demanding a six-year guarantee and a pay rise that the company says would cost it around 250 million zlotys a year.
(Writing by Adrian Krajewski; editing by David Evans)
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