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Turkey’s Yildirim Offers $1Billion to Acquire Six Companies

Turkey’s Yildirim Group, a privately-owned diverse industrial company, has made offers totalling $1 billion in the past two months to buy six companies involved in energy, chrome and ports, owner Robert Yildirim told Reuters on Tuesday. The Turkish magnate declined to name the companies involved for reasons of confidentiality.

REUTERS:

Yildirim Group is looking to buy six companies involved in energy, metals and ports in deals worth $1 billion as it targets global expansion, owner Robert Yildirim said on Tuesday.

The diverse industrial company, founded in 1963 by the Yildirim family as a construction materials trading firm, now has assets and operations in ports, mining and ferroalloys, fertilisers, coal and coke, shipbuilding and construction.

Robert Yildirim, who heads the company, one of Turkey’s fastest-growing industrial firms, began building up the business after leaving Russia’s KRUTrade where he was a coal trader over a decade ago.

The group has also offered to buy distressed shipping assets from European banks and amalgamate these . It expects to do so in early 2013.

“We have definitely seen more M&A opportunities since July, we’ve made six offers to buy companies in Turkey and outside in energy, metals and ports, a total of $1 billion has been offered,” Yildirim told Reuters.

“So far, 50 percent of these are secured and three are still under negotiations – it looks like I’m being aggressive but really I’m being very selective and chose six out of 40-50 opportunities,” he said.

The Turkish magnate said he could not name the companies involved for reasons of confidentiality.

Yildirim said that investing in ships was at the bottom of his shopping list, after ports, mines and energy investments.

IPO OR PRIVATE EQUITY FOR PORTS

He said that he much preferred ports as an investment and was looking to either launch an initial public offering of the group’s port business or seek private equity investment by 2014-15 to grow further.

Yildirim Group is the world’s second-largest ferrochrome player in terms of capacity, he said, and aims to grow its chrome and ferrochrome business, in part through acquisition.

The four-year slump in shipping, one of the worst ever faced by the sector, has already sunk a number of shipping companies including one of Italy’s top dry bulk players, Deiulemar .

Industry sources say banks lending to the shipping sector may have to seize vessels from struggling owners in the coming months in an effort to recoup loans.

The Turkish group has proposed to buy such ships from banks and put them together in its shipping businesses and the right time to do so may come in the first quarter of next year, Yildirim said.

“The banks are listening, they said it was a good proposal but they cannot do it today, the loan-to-value ratio (of their exposure to shipping firms) is so big, but once they start to seize ships then they may consider,” he said.

Yildirim, who signed a deal to buy the 2.5 million-tonnes-a year Turkish bulk port of Rota from Lebanese owners Seament while talking to Reuters, is also involved in projects to build coal-fired power plants in Turkey.

Rota port can handle vessels of up to panamax size, is adjacent to Yildirim’s shipyard and is used for wheat, cement and other bulk materials.

Yildirim plans to invest in Rota, to expand and merge it with his shipyard as part of the firm’s ports portfolio.

“The Turkish government wants to cut its foreign trade deficit especially for energy – energy imports cost more than $25 billion a year – and so there are many new coal-fired power plants which will be built, some using imported coal and some domestic lignite,” he said.

The group is building a 200 MW plant in the east of Turkey next to its ferrochrome plant, to be fuelled by imported coal and is seeking two licences for additional coal-fired plants of 600 MW and 650 MW in the Marmara region.

“The government wants to privatise domestic lignite reserves and companies will have to buy them and build mine mouth power plants – Turkey will be building a lot of these plants,” he said.

Turkey’s economic growth is still strong, meaning it will need more power, but the government wants to reduce dependence on imported energy in the form of coal and gas, he said.

Turkey used to rely on Russia and Ukraine for imported coal which suppliers could sell for a premium before larger ports were built that could take capesize vessels of 150,000 tonnes, he said.

Now larger ships come to Turkey from all over the world and Colombia has displaced Russia as the largest supplier of thermal coal for power generation.

“They (Russian exporters) are learning the effect of the free market,” Yildirim said.

Reporting by Jacqueline Cowhig; Additional reporting by Jonathan Saul; Editing by Anthony Barker