London-listed Globaltrans to acquire Russian rival Metalloinvesttrans for $540m

Russian freight rail company Globaltrans Investment Plc (LON:GLTR) on Friday said it would take over Metalloinvesttrans LLC (MIT), the captive freight rail transportation operator of Russian iron ore producer Metalloinvest, in a cash- and debt-free deal worth USD540m (EUR410m).

With this addition, Globaltrans will boost its fleet to around 60,000 rail cars by mid-2012 and enhance its position as a top private freight rail operator in Russia, the buyer said, adding it would use own funds and secured debt to finance the transaction.

Increased scale and resources will help maximise efficiency and profitability, Globaltrans’ CEO Sergey Maltsev said.

MIT is a high-quality firm, which together with the service contract with Metalloinvest, offers Globaltrans a low-risk opportunity to grow and strengthen its market position, the CEO added.

Under the agreement, Globaltrans and Metalloinvest have sealed a three-year service contract for Globaltrans to handle 100% of Metalloinvest’s rail transportation cargo volumes in the first year of the contract for an agreed price and 60% in the other two years.

MIT, which operated 9,202 railcars as at 31 December 2011, manages rail logistics of Metalloinvest cargo volumes.

Metalloinvest will free up capital through the divestment, its CEO, Eduard Potapov, said. The group’s subsidiaries will also be provided with solutions that would allow them to use Globaltrans’ railcar fleet, he added.

Globaltrans, which will buy MIT through its fully-owned unit OJSC New Forwarding Company, expects to wrap up the deal by the end of May, pending regulatory clearance.