Itella to acquire VR Group’s groupage logistics business

Finland’s Itella Corporation has signed a letter of intent to acquire the domestic groupage logistics division of state-owned railway company VR Group.
The acquisition is subject to approval by competition authorities, but is expected to take about three months to complete.

Itella said the business it was acquiring has net sales of around EUR 130m a year, with a work force numbering more than 800.

The two companies have been considering possible synergies between their logistics businesses since October 2011 with hopes of better coping with the challenging domestic groupage market in Finland and operations in Russia.

Yesterday they said bringing together VR Transport’s groupage business with Itella’s logistics division would eliminate the overlap between the operations of the two state-owned companies.

It will leave VR Group’s logistics business focussing on its transport activity for moving large volumes.

Jukka alho, president and CEO at Itella Corporation, said: “This is good for Finnish logistics operations because the extensive operations also involve efficiency benefits. Our in-depth research has shown that merging the companies’ functions will also achieve advantages visible to the customers.”

Uncertain outlook

Loss-making VR Group also operates in passenger transport and infrastructure construction activities, but has seen freight volumes declining both domestically and cross-border.

Revenue growth in VR Group’s logistics business came to a halt and started to decline in the first three months of calendar year 2012, slipping 1.5% compared to the same quarter in 2011, to EUR 138.9m.

VR Group had said its outlook for logistics in 2012 had been “uncertain”, with “no rapid improvement” expected.

VR Group president and CEO Mikael Aro said: “VR Transport will focus on mass goods logistics and its development both on railways and road. Giving up on groupage logistics is part of the change in VR Group’s strategy.”