FESCO agrees Vladivostok deal

The transaction is structured in two stages. In stage one, FESCO will pay US$90m for a 50% share in M-Port that was previously owned by Magnitogorsk Metallurgical Plant. In stage two, FESCO will acquire the remaining 50% stake within three years, at a pre-agreed price based on a formula related to the port’s financial performance. In addition, the partners have agreed terms on which current shareholders in the Commercial Port of Vladivostok may become shareholders in FESCO.

On completion of this transaction, FESCO Group will include port facilities in all three major marine gateways of Russia – the Baltic, the Black Sea and the Pacific. The Port of Vladivostok will be co-managed by FESCO and the existing management team.

According to FESCO chairman Siman Povarenkin, the acquisition is more to FESCO than simply a financial investment. “This is a long-term strategic alliance with one of the key ports in the Russian Pacific,” he commented. “The port, we are sure, has a bright future, and the alliance between FESCO and VMTP will help to release obvious synergies. We will actively work together with our new partners on further developing the port, building new terminals and [attracting] more cargo.”