Itella signs deal to buy VR Group’s groupage logistics business

Finland’s Itella Logistics has signed a deal to buy the domestic groupage business of state-owned rail firm VR Transport. The deal, which included the urban full-service supply chain logistics subsidiary PT Logistics, was confirmed two months after the Finnish postal operator signed a letter of intent to make the purchase.

In a joint statement today, the companies said they now hoped to complete the acquisition on 1st October, 2012, subject to approval by competition authorities. Neither company was willing to disclose the terms of the deal.

VR Group’s logistics groupage business has a workforce of around 800, and turns over about EUR 130m in revenues each year.

Itella said today that staff at the acquired company – mainly transportation, terminal, and warehouse personnel – will be transferred to Itella on completion of the deal.

VR Group, the brand for the Finnish state railway company after 1995, is focusing on its core passenger rail and rail freight operations. The company has around 11,500 staff compared to Itella Group’s 29,000.

The two companies had been considering an alliance as far back as October 2011, with VR Group looking for ways to turn around its losses and raise capital to invest in new rolling stock, while Itella has been seeking out new growth in the logistics field as its own core mail business declines.

“VR Group will focus on mass goods logistics and its development both on railways and road,” said VR Group president and CEO Mikael Akro.

Jukka Alho, the Itella Group president, said there would be some efficiency benefits in merging VR Group’s logistics groupage operations with Itella Logistics, which would ultimately be to the benefit of customers.