AB Linas Agro Group has signed agreements for the purchase of four Latvian poultry companies. The agribusiness group based in Lithuania intends to purchase 87 percent of the shares of AS Putnu fabrika Kekava, and 100 percent of shares of SIA Broileks, SIA Cerova and SIA Lielzeltini.
AB Linas Agro Group estimates it will spend €12.5 million for the acquisition of shares of the Latvian companies. The transactions are expected to be completed by November 1, and the group intends to acquire all four companies jointly.
"We believe that poultry farming is a growing, viable and profitable industry even though the target companies are in need of restructuring," said Andrius Pranckevičius, deputy managing director of AB Linas Agro Group. "We see the opportunity to expand and diversify our activities by adding higher value-added products. A vertical integration will be implemented in acquired companies - feed production, eggs hatching and raising, slaughter and meat processing. Furthermore, the activities carried out by Latvian companies have a lot of synergy with the current activities of AB Linas Agro Group. We sell around 1.5 million tons of grains and feedstuffs per year, will forward some of the quantities to feed production in Latvia."
According to Pranckevičius, the largest of the purchased companies is a full cycle chicken meat producer AS Putnu fabrika Kekava. The company sells unprocessed chicken meat and chicken meat products. Revenue of the company totaled €33 million in 2012, though the company is not fully utilizing its production capacity. The company exports 27 percent of its products to countries in the European Union.
SIA Lielzeltini produces chicken meat and a range of processed chicken meat products, as well as combined feed for own consumption and sale, its revenue totaled €21 million in 2012 financial year. SIA Broileks is engaged in growing and sale of live chicken with the sales revenue of €1.2 million in 2012. The core activity of SIA Cerova is incubation of hatching eggs and sale of day-old chicks. The company incubated 5.9 million chicks in 2012 financial year and sales of the company amounted to €2 million.
AB Linas Agro Group expects that in the future the acquired group of Latvian companies will generate revenue of around €70 million.