Correction: AB Linas Agro Group seeks to acquire part of AUGA
Group, AB food business
AB Linas Agro Group has supplemented the announcement
with a formula for calculating the acquisition price and the
significance of the acquisition for the company.
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 only be completed subject to clearance by
the Competition Council of the Republic of Lithuania, the consent
of Grybai LT's financing bank, and the fulfillment of other
customary conditions precedent to such transactions.
The final purchase price of Grybai LT shares will be calculated
for the closing date according to the formula set out in the
agreement:
Purchase price = EUR 17,000,000 (i.e. the value
of the Grybai LT shares fixed by agreement between the
parties)minus Grybai LT's net debt (i.e. the
difference between Grybai LT's financial debts and its cash and
cash equivalents)plus the difference between
the Grybai LT's base net working capital (EUR 1,601,176.51)
and the net working capital as at the closing
dateminus all Grybai LT's costs related to the
transaction.
According to Linas Agro Group's valuation, the purchase price is
expected to be up to 2% of Linas Agro Group's assets.
Grybai LT, a cooperative company based in Širvintos with over 40
employees, is active in producing and selling 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 exported to more than 30
countries. Grybai LT's revenue in 2022 was EUR 7.1 million,
consolidated earnings before interest, taxes, depreciation, and
amortization (EBITDA) was EUR 1.3 million, and assets were EUR 7.9
million.
The acquisition of Grybai LT would be particularly significant
for Linas Agro Group in the way that it would supplement the
production of the Group's companies with organic food products and
provide an opportunity to open new markets for other products
produced by the companies of the Group. According to Linas Agro
Group's estimates, over a period of 5-6 years, this acquisition,
with additional investments, would increase the EBITDA of AB Linas
Agro Group by 5-10%.
"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 the 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 maintain an organic product line under a different name. We can
also 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 huge 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 a 100% stake in
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 70 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 GroupMob. +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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