Investment of Pfleiderer AG in Russia Piotr Łagowski

At the beginning of this century the German concern, Pfleiderer AG, was one of Europe’s leading manufacturers of wood-based boards. It made a significant investment in Poland, acquiring facilities in Grajewo and Wieruszów, soon followed by a decision to make another large investment, this time in another Eastern European country (Russia, Ukraine, Belarus or the Baltic states). PLCF Piotr Łagowski was chosen as the strategic advisor for Pfleiderer AG for the project, due to his knowledge of the sector and his expertise regarding projects in this region of Europe.

We first gathered all the available information about the condition of the sector of wood-based boards and its market environment (suppliers, recipients, macroeconomic environment) in particular countries, and prepared a list of the existing manufacturers. We thus created a preliminary long list of potential investment targets. Afterwards, we visited the majority of these companies to examine the technical, market and legal issues, and analysed the strategy of the current owners. This resulted in a short list of potential acquisition candidates.

The next step was to negotiate with the owners of the companies from the short list and to establish, for each of them, the opportunities for utilising any synergy and accomplishing the strategic objectives of the Pfleiderer concern if the acquisition were to take place. Since the answer was negative, the concept of market entry through the acquisition of an existing manufacturer was dropped, and subsequent works focused on choosing the optimum location for a greenfield project. This involved many visits and meetings with regional authorities, potential suppliers, recipients and cooperators. The knowledge gained in the process helped us choose a site that ensured the success of the whole undertaking. The investment location was in Novgorod, and was implemented by the Polish part of the concern. It is still the largest investment completed by the Polish company in Russia (worth several hundred million zloty). .