July 27, 2015 / 4:31 PM / 4 years ago

UPDATE 1-In role reversal, Polish company to swallow German parent

(Recasts, adds quotes, background)

By Anna Koper and Agnieszka Barteczko

WARSAW, July 27 (Reuters) - Shareholders in Polish chip board manufacturer Grajewo 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.


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 . Polish IT firms Comarch and Asseco Poland have bought firms in Germany and Israel.

PKN Orlen, Poland’s biggest oil refiner, owns 558 petrol stations in Germany, representing almost 6 percent of the market, while Polish copper miner KGHM took over Canadian miner Quadra.

Some Polish subsidiaries are growing bigger than their Western European parents.

Portuguese retailer Jeronimo Martins 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, the Polish arm of Italian bank UniCredit, was similar to that of its parent.

“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)

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