Czech transport engineering jewel heads into PPF hands

One of the most significant corporate deals in the Czech Republic has been announced with the purchase of Central Europe’s biggest transport engineering company, Škoda Transportation. And the winning bidder appears to be PPF Group.

Škoda Transportation, photo: archive of Czech Government

The suitors have been many, but in the end it appears that the Czech Republic’s richest man, Petr Kellner, and his closely held group, PPF, has snapped up Škoda Transportation.

The news was announced by PPF spokeswoman, Zuzana Migdalová: "The PPF Group signed an agreement to buy 100 percent of the shares of Škoda Transportation including other shares linked to the activities of Škoda Transportation and including the Škoda protected brand and the property used for the operations of the company."

Part of the deal is also the offer from PPF of a revolving loan to cover the cash needs of the Plzeň-based transport giant.

A purchase of Škoda Transportation has long been seen as on the horizon but PPF was not seen as one of the main contenders. The company employing around 5,300 specialises in the production of trams, trolleybuses, locomotives, and electric buses. Trams are the main business segment with the Czech company having more problems breaking into the European market for locomotives.

The company was for much of the last year seen as heading into the ownership of the world’s biggest transport company, China’s Railway Rolling Stock Corporation. The deal had been earmarked as one in the offing to complete the shopping list of agreements paved by the meeting of Czech and Chinese presidents in Prague last year.

But the deal appears to have got derailed somewhere along the line. Afterwards Škoda Transportation as late as a week ago was rumoured to be heading into the hands of the Czech energy and industrial group EPH. Germany’s Siemens was also supposed to be in the frame. But it is former EPH ally, PPF that has finally clinched the deal for a price rumoured to amount to 10 billion crowns.

Photo: Filip Jandourek

Whether PPF regards Škoda Transportation ownership as long term or transitory, perhaps holding it for a follow on Chinese purchase, is not clear. The purchase still has to be cleared by the Czech Competition Office. PPF, tough mainly a financial services company, has been active in the Czech energy and industry sectors in the past.

Škoda Transportation is registered as being wholly owned by a Cyprus-based company Ceil [Central European Industries Limited]. The real owners were a handful of Czechs, some of whom were involved with the controversial coal miner, Mostecká Uhelná Společnost.

The last company results declared by Škoda Transportation were for 2015 when it announced an operating profit of just over 1.0 billion crowns. That compared with 1.1 billion crowns a year earlier. Turnover in 2015 approached 10 billion crowns.