Acquisitions – a way to globalization

Opinions of a dormant potential within Poland’s economy have been expressed for many years. Until recently it was wondered, which Polish enterprises will be first to become global. At the moment it is clear that for many companies acquisitions are one of the best ways for internationalization.

The recent acquisition executed by KGHM – the purchase of a Canadian company called Quadra – was the most spectacular transaction of this kind in Poland’s history. Lower Silesia’s copper giant surprised all economic media in Canada with the form of payment. The entire amount – 9,5 billion PLN – was handed over in cash which is said to have made quite an impression on the other side of the Atlantic. Now the company will have to face more challenges brought about by similar acquisitions.

It is not the first international acquisition conducted by KGHM, as the company has already obtained deposits abroad, the purchase of Quadra, however, is a different situation. KGHM acquired a medium-sized business that met a barrier in its development. Quadra is in possession of many rich deposits in both Americas but had had troubles starting mining operations. Today it is the objective of a new company – KGHM International – to successfully meet the challenge. Polish engineers and managers face a unique opportunity to build a lot of experience and their own know-how.

The transaction is also important for the general position of KGHM worldwide. Due to the acquisition our company became the fourth largest owner of copper deposits and the third largest in the output of silver. In the latter category, KGHM intends to become the world leader by 2018.

A similar strategy is followed by other Polish businesses, for instance the companies taking part in our programme “Polish Champion”. Acquisitions are a vital part to the strategy of Selena Group, which owns shares of enterprises in Turkey, Russia and Spain (among others – Quilosa – a manufacturer and leader on the Spanish market of glues and sealants). Selena is present on 4 continents via 30 companies and fulfills orders in 70 countries. Spectacular acquisitions on foreign markets have been also made by Koelner (Germany, USA), AB PLC (Czech Republic, Slovakia), Kruk (Romania and recently the Czech Republic). Takeovers such as the purchase of Rawlplug by Koelner illustrate the ambition of Polish businesses. Rawlplug is a British manufacturer of fixing solutions on the market for 90 years, the experience now added to the the potential of the Polish company. The transaction has also a value for the image of Koelner – the tradition and prestige is proved e.g. by the fact that the founder of Rawlplug – John Rawlings – was the first to patent the “rawl plug” (in the US known as the screw anchor) in 1911.

Strategies such as the above are not the only way to conquer foreign markets. Acquisition is usually decided in relation to the business model and specific conditions of the industry. Still, in many sectors, it is the shortest way to globalization.