Finnish state-owned railway operator VR has sold its subsidiary VR Track to Norwegian private company NRC Group in a deal worth €225m.
It will become the biggest rail infrastructure company in the Nordic region, with more than 2400 employees and a €600m annual revenue.
“We’ve signed the transaction today meaning that we’re forming to leading Nordic infrastructure company” VR Group CEO Rolf Jansson said at a press conference on Thursday.
“This is an important milestone in the history of our companies. In our industry, size matters. We will double in size and improve our competitive position, paving the way for further steady growth” says Øivind Horpestad, NRC Group’s CEO.
After the deal is done, VR Group will be the largest shareholder in NRC, holding approximately 18.3% of the shares in the company.
“Basically, 65% [of the deal’s value] is purchased in cash, and 35% paid by shares, so this is giving VR Group ownership in the new company” explains Jansson.
“In VR Group we are highly enthusiastic about the prospects of becoming the largest shareholder of this great, combined company and we expect to take an active role in the continued development of the company, likely through board representation” he says.
Fast Growing Nordic Market
The new company expects to do brisk business, since all of the Nordic countries are investing in infrastructure with new railways, trams, and metro connections as part of their efforts to build more environmentally friendly and sustainable transport systems.
“The market size of Sweden and Norway combined is approximately €2b euros” says Rolf Jansson.
Even before the merger today, VR Track had already grown to become a successful and efficient provider of services in the region, with about 20% of turnover coming from Sweden, according to Jansson.
For its part, NRC Group grew swiftly from when it was founded in 2011 to being a leading infrastructure player in Norway and the third largest in Sweden.
“By combining our forces we’ll the take the number two position also in Sweden, meaning we’re going to have strong positions in all the markets” says Rolf Jansson.
Combining qualities from the two companies
The combination of the two companies ticks boxes for both their strengths.
VR Track has extensive experience with maintenance projects while NRC Group specialises in track construction.
“Our two companies are complementary in terms of market position, capacities and capabilities. We will offer design, construction, maintenance and environmental services across the entire value chain, including ground works, track, security, electro, telecom and transmition information systems, and exciting new opportunities will emerge” says NRC’s Øivind Horpestad.
“Both companies are based upon common Nordic values, where a sustainable and responsible approach to the way we solve our projects and how we act together with our clients, employees, investors and all other stakeholders, is high on our agendas” says Rolf Jansson.