AB Akola Group's Ambitious Acquisition Plans
AB Akola Group is looking to expand its footprint in the Latvian agricultural market through the acquisition of SIA Elagro Trade. This strategic move involves buying 100% of the company for an estimated EUR 22 million, although the final price will depend on the net working capital at the time of closing. The shares are being purchased from Agrolats Holding AS and three individual shareholders, with the deal awaiting approval from the Latvian Competition Council. Completion of the acquisition is expected soon.
The Significance of SIA Elagro Trade
SIA Elagro Trade is one of the leading companies in Latvia's grain, seed, crop protection, and fertilizer sectors, having started its operations in 2010. The company holds around 15% of the Latvian grain market and reported exports of EUR 103 million last year, employing approximately 73 skilled workers.
Enhancing Competitive Edge
Mažvydas Šileika, CFO of AB Akola Group, stated that acquiring Elagro Trade will not only fortify their position in the face of strong competition in Latvia but also improve service efficiency for local farmers. The enhanced infrastructure will allow for greater storage capacity for grains and fertilizers. This acquisition is expected to positively impact the group's financial performance, as SIA Elagro Trade generated EUR 154 million in revenue last year, with an EBITDA of EUR 2.1 million.
Infrastructure Expansion
Elagro Trade boasts a well-established infrastructure, including grain intake stations and regional offices across Latvia, along with silos and storage facilities for seeds and fertilizers. This solid operational framework will greatly support AB Akola’s ongoing initiatives to enhance and streamline their supply chain capabilities.
Strategic Market Growth
Looking ahead, AB Akola Group is committed to strengthening its presence in the Baltic region. The competition is intense, and acquiring Elagro Trade, which is comparable in size to their own SIA Linas Agro, will pave the way for significant growth. Recent statistics reveal that Elagro Trade sourced 435 thousand tons of grain from farmers and exported 377 thousand tons, generating EUR 32 million from these supplies. In contrast, SIA Linas Agro obtained 249 thousand tons of grain and achieved sales exceeding EUR 49 million from various agricultural products.
Continued Investments in Latvia
In the financial year ending June 30, 2024, AB Akola Group's companies sold an impressive 1.5 million tons of cereals and oilseeds, resulting in EUR 388 million in revenue. A substantial portion—nearly EUR 246 million—came from seed and fertilizer sales. Over the past two years, the Group has concentrated on strengthening its operations in Latvia, where it began its journey in 2003. Companies like SIA Linas Agro play a crucial role in supporting local farmers, while emerging businesses like Dotnuva Seeds are also aiming to make their mark in the market, with a new seed factory set to launch by mid-2025.
About AB Akola Group
AB Akola Group is recognized as a leading agricultural and food production company in the Baltics, employing around 4,900 professionals. The group encompasses the entire food production chain, from farm to table, including the production, preparation, and marketing of agricultural products. In the last financial year, the group reported an impressive unaudited revenue of over €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.
