Cersanit has signed final agreement with Romanian Privatisation Agency for purchase of 77.85% of a Romanceram for EUR 2.3m. The shares will be purchased from the Association of Employees of Romanceram. Cersanit is also obliged to increase capital of Romanceram by USD 2.4m. Romanceram located in Roman (350km N-E from Bukarest) had 2004 sales revenues of EUR 7.3m, mostly from sanitaryware. The product offer includes mainly toilets, bidets, washbasins and sinks. The company has around 1,000 employees and has been operating since 1950-ties. The production capacities are not available.
Our view: The acquisition, although small, is very positive news for Cersanit as it is the first step towards the expansion in the attractive Balkan region. We believe that Cersanit is going to invest in Romanceram substantially more than USD 2.4m, increase its capacity and do the proper restructuring, which probably is oing to be necessary. In our opinion the management of Cersanit can use its experience from restructuring of Cersanit, which was originally bought by Michal Solowow from the Polish state treasury some 10 years ago. Additinally, the acquisition gives opportunity to use distribution channels of Romanceram to sell tiles and other Cersanit's products.