Posted on September, 10, 2024 at 07:45 am
SIA Linas Agro, an indirectly controlled company of AB Akola Group, has agreed to acquire a company in Latvia – it is buying 100% of SIA Elagro Trade for a preliminary amount of €22 million. The final transaction price will depend on the net working capital of the target company at the closing date.
The shares are to be purchased from Agrolats Holding AS and three natural persons. The transaction, which is subject to the approval of the Latvian Competition Council, should be completed in 2024 or early 2025.
SIA Elagro Trade is one of Latvia's grain, seed, crop protection, and fertilizer businesses, operating since 2010 and with around 15% of the total Latvian grain market. In 2023, SIA Elagro Trade exported €103 million worth of products. The company has 73 employees.
"The target company is a competitor of our company in Latvia, SIA Linas Agro, a strong grain trader and supplier of goods to farmers. This acquisition will bring efficiency in services to Latvian farmers and help us compete more vigorously in grain exports. At the same time, our existing infrastructure in Latvia will be supplemented, with increased grain and liquid fertilizer storage capacity, and additional area of warehouses for seeds, fertilizers, and plant protection products. We expect to improve the Group's operational and financial performance: in 2023, SIA Elagro Trade's revenue was €154 million, and its EBITDA (earnings before interest, taxes, depreciation, and amortisation) was €2.1 million. We plan to borrow funds for the acquisition of the Latvian company," said MaÅžvydas Šileika, CFO of AB Akola Group.
SIA Elagro Trade has grain intake stations and regional offices in all regions of Latvia. The infrastructure to be acquired will consist of grain silos in Eleja, Jekabpils, and Skulte, covered warehouses for seeds, fertilizers, and plant protection products, and liquid fertilizer storage facilities in Eleja and Jekabpils.
"We want to future–proof our position in the Baltic region. The competition in the market is high. The company to be acquired is similar in size to our company SIA Linas Agro, so we expect to double our growth in Latvia. In 2023, SIA Elagro Trade bought 435 000 t of grain from farmers and exported 377 thousand tons of grain; revenue gained from supplying goods to farmers was €32 million. Last financial year, our company, SIA Linas Agro, sourced 249 000 t of grain and sold fertilizers, seeds, and plant protection products for almost €49 million. The acquisition would bring us over 2.1 thousand new customers and strengthen our infrastructure and capacity to serve farmers. The seed factory currently under construction in Latvia will also be part of that infrastructure. We will be able to serve the customers of both companies faster and more efficiently, offer them more attractive cooperation conditions, and create more value throughout the agricultural inputs and services chain. And the increased number of customers will also allow us to better represent our partners, producers of agricultural inputs, and to be more flexible when exporting Latvian products," stated Jonas Bakšys, Member of the Management Board of AB Akola Group and CEO of AB Linas Agro, which owns SIA Linas Agro.
In the last financial year that ended 30 June 2024, companies owned by AB Akola Group sold 1.5 million t of cereals and oilseeds for an amount of €388 million. Almost €246 million of 2023’s income came from the sale of seeds, plant protection products, and fertilizers. In the previous two years, the group has been working to strengthen its position in Latvia, where it has been operating since 2003. In Latvia, five companies - SIA Linas Agro, SIA Dotnuva Baltic, SIA Linas Agro Graudu Centrs, UAB Geoface, and SIA KG Latvija - serve farmers. Dotnuva Seeds, established in 2023, is just getting ready to start and is building a seed factory in Iecava, Latvia, which should be operational by mid-2025 to produce seed for the local market.
Source: World Fertiliser