May 24, 2013 / 2:16 PM / in 4 years

UPDATE 1-Russian rail freight operators in merger talks -sources

By Gleb Stolyarov

MOSCOW, May 24 (Reuters) - The owners of rail freight operators Globaltrans and NefteTransService are in talks on a merger that would create a business with sales of $2.7 billion and a 10 percent share of the Russian market, industry sources told Reuters on Friday.

“They started (talks) several months ago and have been unable to agree on pricing terms so far,” one source said, while a second source said the talks had become more active lately.

A third said that London-listed Globaltrans, which has a strategy to grow both via acquisitions and organically, is likely to acquire NefteTransService, which is controlled by brothers Vyacheslav and Vadim Aminov and company management.

NefteTransService and N-Trans group, through which founders Andrei Filatov, Konstantin Nikolayev and Nikita Mishin own stakes in Globaltrans, declined immediate comment. Globaltrans, which has a stock market free float of 54 percent, also declined to comment.

A decade ago, Russian cargo owners relied on state-owned monopoly Russian Railways as the main fleet operator, but now 70-90 percent of the country’s freight fleet is privately owned.

According to state-owned Russian Railways, Russia’s freight railcar fleet totals 1.1 million units. Last year cargo traffic totaled 1.3 billion tonnes.

Privately owned NefteTransService does not disclose its financial results but a source at the company said that its revenues stood at around $1.3 billion.

That is slightly below the $1.4 billion top line at London-listed Globaltrans, which has a market capitalisation of around $2.4 billion.

Globaltrans’ earnings edged down last year by 2 percent to $312 million on the back of an increase in financing costs from acquisitions to expand its fleet in an industry opening up to competition.

Globaltrans shares were unchanged in London trading.

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