Pfleiderer takeover by Polish subsidiary underway

Tuesday, Jul 28, 2015

Shareholders at Polish chipboard manufacturer Pfleiderer Grajewo approved on Monday an issue of up to 40 million shares to finance the takeover of parent company Pfleiderer GmbH. The company said in June that part of the proceeds from the share offer would be spent on cutting the combined company's debt.

The deal, worth up to 974 million zloty ($259 million) at June’s market price, seeks to boost the combined entity’s operations and reduce debt. The Polish company said the issue will boost its free float and save as much as 30 million euros ($33.6 million) a year from the end of 2018. The planned transaction would reduce Atlantik’s stake in Grajewo to under under 50 percent from an indirect 65 percent holding now. Pfleiderer Grajewo is currently owned 65.1% by Pfleiderer Service GmbH, a wholly subsidiary of Pfleiderer GmbH. This in turn is 100% owned by the investment company Atlantic SA, which took over Pfleiderer GmbH after the sinking of Pfleiderer AG. 34.1% of the shares of Pfleiderer Grajewo SA are listed on the Warsaw stock exchange freely tradable.

With this move, Grajewo plans to create a large European producer which will be able to face fierce competition in Eastern Europe and expand. The new company, with the name 'One Pfleiderer, intends to target Eastern European and South Eastern European regions, for which its Polish base is well suited.

Grajewo says that ‘One Pfleiderer’ has the potential to benefit from attractive growth prospects and a complementary cash-flow profile between established German and Western European business operations (“Core West”) and growing Polish and Eastern European business operations (“Core East”), allowing it to invest in long-term, regional growth and product innovation, and to accelerate the diversification of the product portfolio with a focus on value-add through innovative decors and surfaces, and specialty products.

The integrated company should be able to increase cross-selling potentials between regions and offer a comprehensive product range in the engineered wood manufacturing market in both established markets and growth regions, where it already benefits from a strong presence, a diversified and loyal customer base and wide brand recognition. With a growing European construction and furniture market and the DACH and Polish macroeconomic environment improving faster than other European markets, Pfleiderer Grajewo believes it is in an ideal position to benefit from recovering markets and new growth initiatives.

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