AB Linas Agro Group seeks to acquire part of AUGA Group, AB food
business
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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