Think Railways

On 2 February 2015, PKP CARGO and KGHM Polska Miedź S.A. concluded a preliminary agreement under which PKP CARGO will take up 49% of shares in Pol-Miedź Trans (PMT), a company wholly owned by KGHM. Both parties intend to finalize the transaction in the second quarter of 2015.

The agreement allows for the continuation of the process leading to the acquisition by PKP CARGO of a 49% stake in PMT in return for a cash contribution and a contribution in kind in the form of locomotives. The agreement entitles PKP CARGO to conduct due diligence of the PMT enterprise and to submit the relevant application to the Office of Competition and Consumer Protection (UOKiK).

KGHM has consistently pursued the strategy of focusing resources on its core business and finding a strategic partner for the railway part of Pol-Miedź Trans will facilitate the process. The transaction will be preceded by the separation of other areas of the enterprise’s business.

“The road transport and fuel trade businesses will be separated from Pol-Miedź Trans and incorporated in other companies within our group as organized parts of the enterprise while maintaining the current staffing and employee benefit levels,” says President of the Management Board of KGHM Polska Miedź Herbert Wirth. “This project is in line with our group’s long-term strategy, which assumes focusing on our core business. An industry partner for our railway operations will enable us to reduce investment in this area while strengthening PMT’s position on the railway freight market.”

For PKP CARGO, the investment in PMT means broadening its customer base and the ability to use its rolling stock more efficiently. The main benefits of this transaction for KGHM Polska Miedź include access to the largest, constantly modernized rolling stock fleet in Poland, and a wide range of logistics services offered by the PKP CARGO Group.

“Cooperation with KGHM is a perfect example of our strategy to strengthen PKP CARGO’s market position domestically and improving our offerings for large industrial groups which operate their own railway freight services. Using our high-quality services, rolling stock and know-how, we can work together to develop highly beneficial synergies for all stakeholders,” says Chief Executive Officer of PKP CARGO Adam Purwin.

PMT controls approximately 2.4% of the Polish rail freight services market, has a stable revenue base and is financially sound. The company has a diverse rolling stock, including 63 locomotives and 1,550 freight wagons for transporting bulk goods. By initiating cooperation with PMT, PKP CARGO will gain another stable source of revenue and new business contacts; the scale of its operations will also be expanded.