Trakcja Railway Builder Buys Tiltra for $269 Million as Polish M&A Triples

Trakcja Polska SA, a Polish railway builder, agreed to take over Tiltra Group AB of Lithuania in a deal that adds 777.5 million zloty ($269 million) to a Polish takeover market that already almost tripled from last year.

Trakcja will buy at least 75 percent of Lithuania’s largest builder, which also owns businesses in Poland, and at least 75 percent of Tiltra’s AB Kauno tiltai unit and 22 percent of Silentio Sp. z o.o., the Warsaw-based company said in a regulatory statement today.

The new company, Trakcja Tiltra, is aiming for annual sales of 3 billion zloty by 2012, compared with a combined 1.9 billion zloty today, Trakcja Chief Executive Officer Maciej Radziwill said at a news conference in Warsaw today, adding that the deal will be completed in the first quarter of next year and Trakcja may skip its 2010 dividend.

“The price seems to be fair, although Trakcja isn’t just getting Tiltra for free,” Piotr Lopaciuk, an analyst at Erste Group Bank AG in Warsaw, told Bloomberg News by phone. “The whole idea looks right and Trakcja is finally making use of the cash” it raised in its 2008 initial public offering, he added.

The sale gives Tiltra an enterprise value, or equity plus debt, of about 7.5 times earnings before interest, taxes, depreciation and amortization and increases Trakcja’s value by about 10 percent, Lopaciuk said.

Bank, TV Deals

The transaction adds to $12.7 billion of Polish mergers & acquisitions so far this year, according to Bloomberg data, up from $4.67 billion in all of 2009, after Banco Santander SA of Spain bought Bank Zachodni WBK SA for 16.6 billion zloty in Poland’s largest deal this year, and this week Cyfrowy Polsat SA agreed to pay 3.75 billion zloty for Telewizja Polsat SA.

The maximum price of 777.5 million zloty ranks the sale as the seventh-largest in this year’s Polish deal list.

Trakcja rose 0.6 percent to 4.78 zloty at 2:23 p.m. in Warsaw trading today, while shareholder AB Invalda jumped 11 percent to 8.28 litai in Vilnius.

Trakcja will sell as much as 72 million new shares at 4.56 zloty apiece to Tiltra shareholders, including investment group Invalda, as well as 292.5 million zloty of bonds, with a 7 percent annual coupon. The Polish company will pay a maximum of 152 million zloty in cash. Tiltra’s owners will also buy warrants entitling them to purchase 47.2 million Trakcja new shares in 2013 at 6 zloty each.

After the merger Comsa Emte’s 51 percent stake in Trakcja will fall to about 35 percent and Invalda will have 13 percent, the Lithuanian shareholder said in a regulatory statement. Other Tiltra shareholders will have 19 percent of the new company.

Trigon Dom Maklerski SA and Deloitte LLP are advising the buyer on the transaction.

-- Editors: Nathaniel Espino, Andrew Clapham

To contact the reporter on this story: Maciej Martewicz in Warsaw at; Marta Waldoch at

To contact the editor responsible for this story: James Gomez at

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