Estonian company Tiigi Keskus made the best offer to buy Operail

The two-stage tender for selling all business operations of the state-owned company AS Operail has just ended. In the second stage of the tender, the best binding bid was made by the Estonian company AS Tiigi Keskus, with whom the final negotiations for signing the purchase-sale agreement have begun.

Several buyer candidates from Estonia and abroad qualified for the second stage of the tender. “We are happy to state that after thoroughly reviewing the assets for sale, all participants decided to submit an offer in the binding offers stage. This shows that, despite the difficult times, the Operail team has done a good job in its business activities and in the privatization process,” said Vladimir Svet, Minister of Infrastructure of the Republic of Estonia.

Based on the mandate given by the Estonian Government, the Supervisory Board of AS Operail made the decision to start negotiations to conclude a sales contract with AS Tiigi Keskus, which made the highest offer.

Today, on October 17, the parties signed an agreement to start the negotiations regarding the final terms of the purchase and sale agreement, which will take place in the following weeks. If the final negotiations are successful, a purchase and sale agreement will be signed with the winner of the tender, and after fulfilling the terms of the agreement, the transaction will be completed – AS Operail’s freight transport and rolling stock repairs business will be transferred to the new owner.

Tiigi Keskus is an asset management company based on Estonian capital, whose main field of activity is real estate management. In addition, the company owns a majority stake in Tartu Mill, the largest food grain processing and pasta production group in the Baltic States.

“For Tiigi Keskus, the railway business is a new and promising field of activity that has certain synergies with the existing business. We plan to continue offering high-quality freight transport and rolling stock repairs services in Estonia and to expand the operations geographically,” said Uuno Lausing, a member of the board of Tiigi Keskus.

If the negotiations do not lead to the signing of the purchase and sale agreement, other buyers who submitted binding bids at the second stage of the tender will have the opportunity to start negotiations of a sales agreement. For this reason, more detailed information about the sales process and results, including the number of bidders and the sales price, can only be published after the transaction has taken place.

The tender for the sale of AS Operail’s freight transport and repairs business started on June 7. A two-stage tender was held to find a buyer. In the first stage, those interested in purchasing could familiarize themselves with the initial information package and submit a non-binding offer. Additional information was made available to investors who qualified for the second stage, and binding offers were submitted. The sales process is carried out by the investment banking unit of LHV Pank, the legal advisor of the process is Ellex Raidla Advokaadibüroo.

AS Operail is a state-owned company under the administration of the Ministry of Climate. Operail operates in freight transport on Estonian railways and rolling stock maintenance and repairs. Until the beginning of 2023, Operail was also engaged in wagon rental and freight transport in Finland, but the owner decided to exit from these business lines, which are not strategically necessary for the country. In February 2024, the government made a substantive decision to privatize Operail’s remaining business lines.