For the price of EUR 90 million (USD 95.7 million), northern European food company, HKScan, has sold its Baltic subsidiaries to Estonia-based food company, Maag Grupp.
With inflation increasing supply costs, HKScan has reported challenges in maintaining profits. While it is estimated the purchase will decrease HKScan’s sales by EUR 210 million (USD 223.3 million), the Earnings Before Interest and Taxes (EBIT) is expected to improve by approximately EUR 26 million (USD 27.7 million).
“The sale of the Baltic business will improve HKScan’s profitability and strengthen its balance sheet,” said HKScan’s interim CEO Juha Ruohola. “In addition, the divestment will enhance our ability to improve our operational efficiency and to execute our long-term strategy of growing into a versatile food company.”
Still awaiting regulatory approval from Estonia and Latvia, the purchase will include AS HKScan Estonia, AS HKScan Latvia and UAB HKScan Lietuva. The Baltic facilities are located in Rakvere, Tabasalu and Viiratsi in Estonia and Jelgava in Latvia with brands like Rakvere, Tallegg, Rigas Miesnieks, Jelgava and Klaipedos Maistas.
Of the EUR 90 million, EUR 70 million (USD 74.4 million) is the fixed purchase price, and the remaining EUR 20 million (USD 21.3 million) is conditional on the combined performance of the separately defined meat business subject to the transaction, according to the press release. EUR 55 million (USD 58.5 million) will be paid at the close of transaction with the remainder spread out over the next three years.
“The acquisition of HKScan’s Baltic business will help Maag strengthen its position and achieve the full synergies in the Baltic market,” said Roland Lepp, chairman of the supervisory board of AS Maag Grupp. “This will also provide us all better food security in turbulent times.”
HKScan’s Baltic business amounted to EUR 170 million (USD 181.1 million) in 2021 with an average of 1,500 employees across three countries.
According to WATT Global Media’s Top Companies Database, HKScan is one of the leading food companies in northern Europe and Russia with 93 million head slaughtered annually.
