July 4, 2013

AB Linas Agro plans to acquire 87% of shares in Latvian company AS Putnu fabrika Kekava, 100% of shares in Latvian company SIA Broileks, 100% of shares in Latvian company SIA Cerova and 100% of shares in Latvian company SIA Lielzeltini.

The transactions should be completed by December 2013, their completion is subject to certain conditions precedent, including obtaining of permission of the Competition Council of the Republic of Latvia. AB Linas Agro Group's financial advisors have been Porta Finance while legal advice has been provided by Raidla Lejins & Norcous.

AB Linas Agro Group initially estimates to spend €12.5 million (US$16 million) for the acquisition of shares of the Latvian companies.
 

"AS Putnu fabrika Kekava, SIA Broileks, SIA Cerova and SIA Lielzeltini are entities operating in poultry industry. Their core activity is meat poultry and broilers breeding. We intend to acquire all the companies jointly. We believe that poultry farming is a growing, viable and profitable industry even though the target companies are in need of restructuring. 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 tonnes of grains and feedstuffs per year, will forward some of the quantities to feed production in Latvia", said Deputy Managing Director of AB Linas Agro Group Andrius Pranckevičius.

According to Andrius Pranckevičius, the largest of the purchased companies is a full cycle chicken meat producer AS Putnu fabrika Kekava (PFK). The company sells unprocessed chicken meat and chicken meat products. Revenue of the company totalled €33 million (US$43 million) in 2012. The company exports 27% of its products to EU countries. During the crisis, the company's financial performance deteriorated and as a result it is undergoing the legal protection process and restructuring which should end by January 2014.

As a result the company is not fully utilising its production capacity. 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 totalled €21 million (US$27 million) in 2012 financial year. SIA Broileks is engaged in growing and sale of live chicken with the sales revenue of €1.2 million (US$1.6 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 (US$2.6 million). AB Linas Agro Group expects that in the future the acquired group of Latvian companies will generate revenue of around €70 million (US$91 million).

AB Linas Agro Group is an agribusiness parent company engaged in the production and trade of grains, oilseeds, feedstuff and agricultural inputs. It controls companies in Lithuania, Latvia, Estonia and Denmark. Consolidated revenue of AB Linas Agro Group for nine months of financial year 2012-13 totalled LTL1,658 million (US$624 million), EBITDA is LTL116 million (US$44 million).