0NSG Akola Group Ab

On 7 June 2023, AB Kauno Grūdai, owned by AB Linas Agro Group, signed a share purchase and sale agreement with the shareholders of the cooperative company Grybai LT for the acquisition of 100% of this company's stock. Negotiations on the acquisition of the shares of Grybai LT were conducted based on a letter of intent concluded on 7 March 2023 between AB Kauno Grūdai and Baltic Champs, UAB, the owner of the stock of Grybai LT.

The transaction will be completed only if the permission of the Competition Council of the Republic of Lithuania to carry out the concentration is obtained, the consent of the bank financing Grybai LT and other preconditions usual for such transactions are met.

Grybai LT share purchase price will be calculated for the closing date in accordance with the formula set out in the agreement, considering the company's current financial data as at the closing date, including its working capital, financial debt, cash and transaction costs.

Grybai LT, a cooperative company based in Širvintos with over 40 employees, is active in the production and sale of ready meals. The company operates a modern robotic factory covering an area of around 3,600 sq meters. The main products produced are ready-to-eat organic soups, curries, cereal meals and organic vegetables in packets - around 70 product names. The annual production is 8-9 million packets of various products which are exported to more than 30 countries. Grybai LT's revenue in 2022 was EUR 7.1 million, consolidated earnings before interest, taxes, depreciation, and amortisation (EBITDA) was EUR 1.3 million and assets were EUR 7.9 million.

"Our ambition is to grow by diversifying our activities, and the most attractive seems to be expansion in the food segment. We have not yet had any ready-to-eat product groups in our range, nor have we had any organic food products. Following the acquisition of Grybai LT, we will expand our product range with three new product groups. Organic products will not only complement our product range perfectly but will also take us into markets such as the US and Japan, where Grybai LT has made significant inroads. We see an opportunity to increase production and an evident synergy with our other activities," says Darius Zubas, Chairman of the Board of Linas Agro Group.

The AUGA brand is not being purchased. The production facilities, recipes and contracts with buyers are. And although the company is called Grybai LT(eng. mushrooms), it is not engaged in mushroom growing or processing business.

"We are not new to the consumer food segment and have popular brands. However, until now we have not had an organic food offer. We expect to cooperate with organic vegetable growers in Lithuania and to maintain organic product line, but under a different name. We will also be able to produce private label products for our customers according to their preferences - not just organic.

While obtaining the company, we already think about expansion. The European market is very large and attractive: around 1.8 million tons of soups and 1.3 million tons of ready meals are consumed annually. Grybai LT can currently produce around 3 thousand tons, so the prospects for growth are high. Over the next 5-6 years, we plan to invest an additional EUR 4.4 million to expand maximum production capacity to 33 million packets or 11 thousand tons per year, and to increase annual EBITDA from EUR 1.3 million to EUR 6 million", says Andrius Pranckevičius, Deputy Chairman of the Board of AB Linas Agro Group and CEO of AB Kauno Grūdai.

According to A. Pranckevičius, it is the synergy with other activities that will highlight the value of this acquisition.

"Grybai LT will fit perfectly complement the business scheme and activities of Kauno Grūdai, the company's production will open new markets for other products manufactured by Kauno Grūdai. For example, the USA is a dream market, as over 1 million tons of soups alone are consumed annually, but it usually takes years to enter and establish oneself. We hope to see not only organic soups but also our other products on the shelves in the US.

Grybai LT currently sells around 20% of its production in the EU. Meanwhile, our noodles are already well established in the EU market, working with 30 of the EU's largest supermarket chains, and we hope to be able to successfully sell soups, curries, and other meals in packets there. We see an opportunity to increase production to 24 hours a day and to sell new products on the EU market to those customers who already buy our porridges and noodles," says Pranckevičius.  

The shares in Grybai LT are sold by the cooperative companies AgroMilk, Juodmargėlis, Šventosios Pievos, also UAB Baltic Champs and UAB AUGA Luganta, all of which together own 100% stake of Grybai LT. Two of the latter sellers are owned by the public company AUGA group, while the others are also related to this company through shareholders.

"We are delighted to be able to put the business we have developed in good hands. The new owners of Grybai LT will be able to use their experience and synergies with their other activities to expand in the existing markets and to reach even more export markets, creating value for the company, its employees, and the Lithuanian economy as a whole," says Kęstutis Juščius, General Manager of the AUGA group.

AB Linas Agro Group was represented in the transaction by the law firm Norkus ir Partneriai COBALT, and the companies selling the stake by the law firm WALLESS.

About AB Linas Agro Group

AB Linas Agro Group employs almost 5 thousand people in a group of 69 agribusiness and food companies. The Group's financial year starts on 1 July. The Group's consolidated revenue for the nine months of the 2022/2023 financial year exceeded EUR 1.5 billion, with a net profit of EUR 25 million.

Additional information will be provided by:

Andrius Pranckevičius, Vice-Chairman of the Board of AB Linas Agro Group Mob. +370 687 71 419 E-mail a.pranckevicius@linasagro.lt

CFO of Linas Agro Group AB Mažvydas ŠileikaMob. +370 619 19 403E-mail m.sileika@linasagro.lt

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