Leaders of the Port of Rijeka on Port Acquisitions’ takeover offer: Price fair, but plans questionable

The Czech company Port Acquisitions recently made an offer to acquire the Port of Rijeka, after acquiring 33.73 percent of its shares and currently holding a total of 34.42 percent of the shares. The management of the Port of Rijeka and representatives of the workers have now expressed their views on this offer.

At the Zagreb Stock Exchange, the management of the Port of Rijeka explained that the takeover price of 8.4 euros per share, considering the current market price, is appropriate and ‘reflects the fair value of the shares’ of the Port of Rijeka. They also note that their opinion does not represent investment advice regarding the acceptance or rejection of the takeover offer.

Unsubstantiated growth

However, they believe that the expected growth in container traffic of at least 10 to 15 percent annually is ‘not substantiated’ and it is unclear from the offer where such expectations of Port Acquisitions arise.

– Namely, the Target Company is not the concessionaire of the container terminal, and any potential growth in container traffic could only affect the Target Company in relation to the increase in traffic at the container depot. However, this is a completely arbitrary estimate.

The bidder simultaneously predicts ‘an increase in port capacity from approximately 10 million tons of dry cargo to approximately 20 million tons’, noting that this is based on ‘significant investments in the development of the port, planned until the expiration of the Concession Agreement (2042), thus on already accepted investment plans that the Target Company is obliged to execute in accordance with the Concession Agreement, but without any explanation regarding the mentioned data or plans for significant investments in the development of the port, and without presenting a plan that could lead to the realization of the allegedly planned increase,’ states the explanation from the management of the Port of Rijeka.

The management also believes that the offer is based solely on the assumption of the construction of a lowland railway line, which neither Port Acquisitions nor the Port of Rijeka can influence.

– Thus, the construction of the lowland railway line is cited as the main condition for increasing port capacity, which is not even close to starting. Therefore, the allegedly planned increase in capacity to 60 million tons of cargo by the end of the Concession Agreement is unfounded, the management states.

Additionally, Port Acquisitions states that the mentioned increase in port capacity will be achieved through planned investments; however, the management emphasizes that they have not specified these investments, nor their amounts. Given this, it is unclear how and when Port Acquisitions intends to invest in the Port of Rijeka, immediately or by the expiration of the concession agreement, the management adds.

They also believe that Port Acquisitions’ knowledge regarding port management ‘does not represent technological (expert) knowledge and experience (know-how) for the implementation of already adopted business plans’ of the Port of Rijeka.

No agreement

Port Acquisitions, representatives of the workers of the Port of Rijeka believe, did not state or explain their opinion on employment policy and the equal status of workers, as well as possible changes in the locations where the Port of Rijeka operates.

– Although the Offer states that the takeover offer will not have a significant impact on the labor-legal status of the workers of the Target Company nor on the labor-legal status of the workers of the Bidder, it is unclear how the Bidder plans to fulfill this given that the content of the Offer plans to introduce a new management model for the Port of Rijeka, which includes certain changes in the systematization of jobs of the Target Company, the explanation states.

The President of the Management Board of the Port of Rijeka Duško Grabovac does not hold shares in the company and does not intend to accept the takeover offer, just like the member of the Management Board Marina Cesarac Dorčić, is stated in the announcement, and there is no agreement between the Management Board of the Port of Rijeka and Port Acquisitions regarding the takeover offer.