Textile tie-up suits investors

The details of a merger between the suit producer Vistula and shirt manufacturer Wólczanka will be known by the end of May and the shareholders' meeting passing the merger resolution will take place on June 25. Vistula will take over Wólczanka and the new entity will be run by the current Wólczanka CEO, Rafał Bauer, who has already replaced Michał Wójcik at the helm of Vistula.

"The two brands are going to remain on the market but we operate in the same sector of the same business. The merger is as obvious as the fact that you wear shirts with suits and vice versa," Bauer explained.

Vistula and Wólczanka are planning to strengthen their presence on foreign markets and purchase other companies from the sector. "Thanks to the merger we will be able to work on takeover projects both in Poland and abroad. As a result of the tie-up a strong mid-cap company will come into being but it won't be the only move of the management towards a more dynamic development," explained Michał Wójcik, who will be the deputy president of the new entity.

Market analysts think the tie-up is a good idea. "The merger will allow the reduction of management costs, for instance by merging accounting and marketing departments. It will also bring synergy effects enabling the companies to negotiate lower retail space rental prices or other rebates," says Marcin Materna, a DM Millennium analyst.

Vistula forecasts that this year its sales revenues will reach zł.150 million and net profit zł.17 million. In case of Wólczanka, the expected figures are zł.105 million and zł.7.5 million respectively. The market capitalization of the merged apparel producers will exceed zł.390 million.

As soon as news of the merger was revealed last Thursday, the share price of both companies increased - Wólczanka by seven percent and Vistula by 3.7 percent.

Katarzyna Dębek