In role reversal, Polish company to swallow German parent (updated)

Comarch SA

27/07/2015 17:27

(Recasts, adds quotes, background) 
    By Anna Koper and Agnieszka Barteczko 
    WARSAW, July 27 (Reuters) - Shareholders in Polish chip 
board manufacturer Grajewo  GRJ.WA  on Monday approved a share 
issue to raise about $270 million to help the company take over 
its German parent, a role reversal growing more common as Poland 
outgrows its position as one of Europe's poor relations. 
    After shaking off Communist rule nearly three decades ago, 
Poland has achieved economic success as a low-cost manufacturing 
base for western European firms. But that model is changing as 
Polish businesses hit the acquisition trail. 
    "This is not a one-way street anymore," said a fund manager 
from one of the biggest Polish pension funds, speaking on 
condition of anonymity. 
    "After 20 years or so of capitalism, Poland has built up the 
appropriate skills and capital potential to help its companies 
take the initiative and enter foreign markets." 
    Grajewo, which is listed on the Warsaw stock exchange, is 
majority-owned by privately-held German wood products firm 
Pfleiderer Service GmbH, which is in turn controlled by Atlantik 
SA, an investment fund. 
    The money raised from the share issue, which will be 
targeted at investors on the Polish market, will finance the 
purchase of all Pfleiderer shares from Atlantik SA, Grajewo has 
said. Grajewo said shareholders approved an issue of up to 40 
million shares, which based on the current share price of 25.31 
zlotys is worth over 1 billion zlotys ($269.51 million). 
    Under the new ownership structure, Grajewo will be dominated 
by Polish investors, mainly investment and pension funds, 
effectively ending German control, according to a source close 
to the share issue. 
     
    INVESTOR APPETITE 
    The Warsaw stock exchange provides a quick and more flexible 
route for companies wanting to sell out of Polish firms rather 
than seek specific buyers for their holdings. 
    The Grajewo deal is part of a growing trend in Poland, the 
only European Union economy to avoid recession since the 2008 
global financial crisis and where gross domestic product growth 
consistently outstrips the EU average.   
    Polish condom maker Unimil became a pioneer about 10 years 
ago when it took over its indebted German parent company Condomi 
 CODOM.UL . Polish IT firms Comarch  CMR.WA  and Asseco Poland 
 ACPP.WA  have bought firms in Germany and Israel.  
    PKN Orlen  PKN.WA , Poland's biggest oil refiner, owns 558 
petrol stations in Germany, representing almost 6 percent of the 
market, while Polish copper miner KGHM  KGH.WA  took over 
Canadian miner Quadra. 
    Some Polish subsidiaries are growing bigger than their 
Western European parents. 
    Portuguese retailer Jeronimo Martins  JMT.LS  derived 66 
percent of its full-year 2014 revenue from Biedronka, its Polish 
supermarket discount chain. The Polish business is also much 
more profitable, accounting for 78 percent of its parent's core 
profit. 
    In one of the more striking examples of this shift, the 
fourth-quarter net profit produced by Bank Pekao  PEO.WA , the 
Polish arm of Italian bank UniCredit  CRDI.MI , was similar to 
that of its parent.  ID:nW8N0V2021   ID:nL5N0VL3N0  
    "Polish companies look very good in terms of their 
management or results, not only in the region but also in a 
comparison with companies of Western Europe," Adam Milewicz, an 
analyst with ING Securities, said.  
 
 
($1 = 3.7104 zlotys) 
 
 (Additional reporting by Jakub Iglewski, Pawel Sobczak and 
Monika Miller; Writing by Marcin Goclowski; Editing by Christian 
Lowe and Jane Merriman) 
 ((agnieszka.barteczko@thomsonreuters.com; +48226539700; Reuters 
Messaging: agnieszka.barteczko.reuters.com@thomsonreuters.net)) 
 
Keywords: POLAND GRAJEWO/NEWISSUE