NRC Group, a Norwegian company, entered into an agreement with VR Group for the acquisition of VR Track engaged in the business of railway construction, maintenance services and design with operations in Finland and Sweden. The purchase price is based on an enterprise value of VR Track of EUR 225 million on a cash and debt free basis with normalised working capital. 65% of the purchase price shall be paid in cash by NRC Group while the remaining 35% of the purchase price shall be paid in the form of consideration shares in NRC Group at an agreed price per consideration share of NOK 75.31 (EUR 7.95).
The Transaction will be structured as an acquisition of all shares in VR Track by a newly established and wholly owned Finnish subsidiary of NRC Group, from VR Group.
VR Group will obtain an ownership in NRC Group representing around 18% of the total number of issued shares in NRC Group following completion of the transaction. NRC Group will seek to facilitate representation by VR Group on the board of directors of NRC Group.
Completion of the transaction is conditional upon anti-trust approval in Sweden, certain regulatory approvals in Finland, approval by an extraordinary general meeting of NRC Group as well as certain other customary closing conditions.
Closing of the transaction is expected to take place in early January 2019, subject to satisfaction of the closing conditions.
“Our two companies are complementary in terms of market position, capacities and capabilities. We will offer services across the entire value chain, including design, ground works, track, security, electro, telecom and signalling systems, and exciting new opportunities will emerge,” Øivind Horpestad, CEO of NRC Group said.
The combination of NRC Group and VR Track will create the leading specialized rail infrastructure company in the Nordics, with strong capabilities across the entire railway value chain and leading positions in the attractive Norwegian, Swedish and Finnish markets.
The Finnish rail infrastructure market exhibits similar characteristics as Norway and Sweden, with urbanisation, focus on the environment and sustainability as well as historical underinvestment and maintenance backlog. As a result, the Finnish market is expected to grow by an average annual growth rate of 8% from 2017 to 2022.
VR Track owns 100% of the Finnish subsidiary Arcus Oy and the Swedish subsidiaries VR Track Sweden AB and VR Infrapro AB. As of June 30, 2018, VR Track had an order book of EUR 401 million.
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