Finnish state-owned railway operator VR Group has signed an agreement to sell its subsidiary VR Track to Norwegian infrastructure business NRC Group.

The transaction is expected to result in the formation of a specialised rail infrastructure company, with annual revenues in excess of Nkr6bn ($734m).

With a combined workforce of more than 2,450 employees, the consortium will have strong capabilities across the entire value chain and emerge as a significant player in the Norwegian, Swedish and Finnish markets.

NRC Group noted that the transaction values VR Track at €225m on a cash and debt-free basis.

Under the deal, 65% of the total will be paid in cash, with the remaining 35% paid in the form of consideration shares at an agreed price of Nkr75.31 ($9.20) per share.

“We will double in size and improve our competitive position, paving the way for further steady growth.”

VR Group will own around 18.3% of NRC Group to become the largest shareholder in the company.

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NRC Group CEO Øivind Horpestad said: “We will double in size and improve our competitive position, paving the way for further steady growth. Our two companies are complementary in terms of market position, capacities and capabilities.

“We will offer design, construction, maintenance and environmental services across the entire value chain, including groundworks, track, security, electro, telecom and signalling systems, and exciting new opportunities will emerge.”

The transaction offers operational synergies. Once the deal is closed, VR Track will operate as a subsidiary of NRC Group.

Subject to receipt of regulatory approvals and satisfaction of other closing condition, the deal is due to be completed in January next year.

With 11 regional offices across Norway and Sweden, NRC Group supplies track-related infrastructure services, as well as signalling systems and environmental solutions.