Ferrexpo (LON:FXPO) is taking greater control of its supply chain, with a deal to acquire Helogistics Holdings GmbH for €28.5 million.
Helogistics is an inland waterway logistics firm that transports bulk cargo - including Ferrexpo’s iron ore pellets - along the Danube and Rhine waterways.
It carries more than half a million tonnes of Ferrexpo’s iron ore pellets each year, taking them from Ismail in Ukraine to Rotterdam in the Netherlands.
"This acquisition adds to Ferrexpo’s extensive logistics network in Northern, Central and Eastern Europe solidifying our presence as the regional market leader in iron ore pellet supply,” Ferrexpo chairman Michael Abrahams said.
“It is part of our strategy to further control the supply chain securing existing customer relationships and providing access to new European markets throughout the Rhine/Danube River corridor in Europe.”
To buy Helogistics, Ferrexpo will pay €28.5 million in cash for all the issued share and it will also assume the firm's banking debt - which has a face value of €72.1 million.
Earlier this year Ferrexpo loaned Helogistics €6 million and this facility will remain in place.
In 2009, Helogistics transported just over 504,000 tonnes of iron ore pellets for Ferrexpo, and in the last eleven months - 30 November 2010 - it had transported 575,000 tonnes to Ferrexpo’s primary customer in Central Europe.
For the full year to 31 December 2009, Helogistics reported earnings (EBITDA) of €0.7 million and in its most recent interim results its gross assets were €58.8 million and its net assets were estimated at €28.5 million.