Computer giant in merger talks
By : Roseanne Gerin
JTT Computer (http://www.jtt.com.pl), Poland's second-largest personal computer producer and distributor, expects to conclude talks with a domestic IT firm for a possible merger before the company goes public in late 2001 or early 2002, a JTT executive said last week.
The Wroclaw-based firm, which produces and distributes PCs under the brand name Adax, will wrap up talks with the unlisted IT firm within the next six months before it holds an initial public offering, said Jerzy Krawczyk, a JTT vice president who oversees the firm's financial affairs. He declined to name the company since negotiations are ongoing, but confirmed it was not NTT System, the third largest PC maker in Poland.
In its quest to replace Polish computer giant Optimus (http://www.optimus.pl) as the largest PC producer in the country, JTT held merger talks last October with Warsaw-based computer-component firm TCH (http://www.e-comp.pl). The talks were cancelled when JTT determined it would have to pay zl. 15-20 million ($3.6 million-$4.8 million) to get access to TCH's sales channel, Krawczyk said. He also said that JTT never planned to team up with NTT to form a possible partnership with Optimus, as local press agencies reported last October.
Poland's PC market has become competitive in recent years, especially with international companies such as U.S.-based Compaq making inroads. Some industry professionals predict that domestic operators will have to consolidate to survive.
"It's the way Polish companies, especially in distribution, can compete in the future with international brands," Krawczyk said. "It's difficult to grow on this market because it's not so booming as in the past."
Last year, Optimus had 12.7% of Poland's PC-desktop market share in units, followed by JTT with 8.9%, NTT with 7.9% and Compaq with 7.2%, according to International Data Corp. (IDC), an IT market analysis firm. Polish venture capital firm MCI Management, which owns 40% of JTT, has said that it wants JTT to increase its market share by up to 10% during the next two years.
In its IPO, JTT plans to float 100% of the company for about zl. 15 million ($3.6 million) in equity, Krawczyk said, adding that the capital would be spent on PC-production operations and the further reorganization of the firm's sales channels.
Tomasz Czechowicz, the president of MCI, said JTT would consider possible merger plans with other firms before or after the IPO. He added that JTT informed MCI that its IPO would take place in 2002 or 2003, although he said it could happen this year.
Founded in 1990, JTT was prepared to go public three years ago, but postponed an IPO after deciding to implement a restructuring plan to improve its productivity by closing local warehouses and centralizing its distribution operations at its Wroclaw headquarters. The company completed the two-year restructuring plan last December and cut its work force from 330 to 300 employees, Krawczyk said.
JTT sold 60,000 PCs last year and expects to sell 10-15% more in 2001, Krawczyk said. The company expects revenue of zl. 480 million-zl. 490 million ($117 million-$119 million) for the fiscal period March 2000-March 2001.
