AB Akola Group's Strategic Move to Acquire Elagro Trade
AB Akola Group's Ambitious Acquisition Plans
AB Akola Group has set its sights on expanding its influence in the Latvian agricultural market by planning to acquire SIA Elagro Trade. This strategic move involves purchasing 100% of the company for an estimated EUR 22 million. However, the final price will hinge on the net working capital at the closing date of the transaction. The shares are being acquired from Agrolats Holding AS and three individual shareholders, pending approval from the Latvian Competition Council, with completion anticipated in the near future.
The Significance of SIA Elagro Trade
SIA Elagro Trade stands as one of Latvia's dominant players in the grain, seed, crop protection, and fertilizer sectors, having launched its operations in 2010. The company commands approximately 15% of the Latvian grain market and recorded exports totaling EUR 103 million in the last year, employing roughly 73 skilled individuals.
Enhancing Competitive Edge
According to Mažvydas Šileika, CFO of AB Akola Group, acquiring Elagro Trade not only strengthens their position amid stiff competition in the Latvian market but also aims to enhance service efficiency for local farmers. The expanded infrastructure will enable increased storage for grains and fertilizers. This acquisition is predicted to bolster the financial performance of the group, given that SIA Elagro Trade generated EUR 154 million in revenue last year, with an EBITDA of EUR 2.1 million.
Infrastructure Expansion
Elagro Trade's existing infrastructure includes grain intake stations and regional offices throughout Latvia, along with silos and storage facilities for seeds and fertilizers. This robust operational framework will significantly complement AB Akola’s ongoing efforts to grow and refine their supply chain capabilities.
Strategic Market Growth
With an eye toward the future, AB Akola Group is determined to solidify its standing in the Baltic region. The competition remains fierce, and the acquisition of Elagro Trade, which is similar in scale to their own SIA Linas Agro, will facilitate substantial growth. Recent figures indicate that Elagro Trade procured 435 thousand tons of grain from farmers and exported 377 thousand tons, yielding EUR 32 million from farmer supplies. Meanwhile, SIA Linas Agro sourced 249 thousand tons of grain and achieved sales in excess of EUR 49 million from various agricultural products.
Continued Investments in Latvia
In the past financial year concluding on June 30, 2024, the companies under AB Akola Group's umbrella sold a remarkable 1.5 million tons of cereals and oilseeds, generating EUR 388 million in revenue. A significant portion, nearly EUR 246 million, derived from sales of seeds and fertilizers. Over the last two years, the Group has focused on fortifying its operations in Latvia, where it commenced operations in 2003. Companies like SIA Linas Agro and others play a vital role in assisting local farmers, with emerging companies such as Dotnuva Seeds also looking to establish a footprint in the market with a new seed factory operational by mid-2025.
About AB Akola Group
AB Akola Group is recognized as a premier agricultural and food production entity in the Baltics, employing approximately 4,900 professionals. The group encapsulates the entire food production chain from the farm to your table, which includes the production, preparation, and marketing of agricultural products. The last financial year saw an impressive unaudited revenue surpassing €1.5 billion.
Frequently Asked Questions
What is the purpose of AB Akola Group's acquisition of Elagro Trade?
The acquisition aims to enhance AB Akola Group's market presence and operational efficiency within the Latvian agricultural sector.
What impact will the acquisition have on farmers?
This acquisition is expected to improve service efficiency, providing farmers with better access to agricultural inputs and services.
When is the acquisition expected to complete?
The completion of the acquisition is anticipated for 2024 or early 2025, pending regulatory approval.
What does SIA Elagro Trade specialize in?
SIA Elagro Trade specializes in grain, seeds, crop protection, and fertilizers, playing a significant role in the Latvian market.
How has AB Akola Group performed financially?
In the last financial year, AB Akola Group achieved sales of 1.5 million tons of cereals and oilseeds, generating a revenue of EUR 388 million.
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