Linas Agro Group borrows from banks to fund acquisition of KG Group

VILNIUS, LITHUANIA:  Linas Agro Group, is borrowing funds from Luminor, Swedbank and SEB banks to finance the acquisition of companies of the KG Group.

The syndicated local will be granted under the permission to execute the said acquisition issued by the Lithuanian Competition Council, a news release said.

AB Linas Agro Group entered into a Share Purchase Agreement regarding the acquisition of controlling interest of AB Kauno Grūdai, AB Kaišiadorių Paukštynas, AB Vilniaus Paukštynas and related companies on 1 October last year. Permits have already been obtained from the competition authorities of Latvia, Estonia, Poland and Russia. The decision of the Lithuanian Competition Council regarding the implementation of the concentration is expected in July.

“We have been cooperating with all three banks for quite a number of years, and they are well aware of the specifics of both agribusiness and food industry activities, as well as of the growth potential of our group of companies. The successful previous cooperation and mutual trust will allow us to take a big step forward in expanding the scope, areas and geography of our activities,” says Mažvydas Šileika, Finance Director at Linas Agro Group.

The amount of the syndicated loan is not disclosed, as it would reveal the value of the transaction, which would be contrary to the agreement between the sellers of the companies of the KG Group and the buyer on the confidentiality of the transaction.

According to M.Šileika, around one third of the transaction amount is planned to be financed from own funds, and the amount of the loan syndicated by the banks will make up 70% of the transaction value. As for now, Linas Agro Group is not in a position to disclose any further information about the agreement with the banks.

Experts of the banks financing the transaction consider the planned acquisition to be a positive impetus for the development of the agricultural and food production companies and their competitiveness in international markets.

“This is a significant transaction on the country scale: the merge of two large market participants operating in overlapping markets, both of which are extremely successfully managed and vertically integrated groups of agricultural and food industry companies. We appreciate the confidence of Linas Agro Group in choosing SEB Bank as the main agent in the transaction concerning this exceptional investment.

The enterprise has been successfully developing both local and international trade in agricultural products so far; therefore, the present acquisition will enable the group of companies to significantly increase its operations in the Baltic States, Poland, as well as in the Scandinavian and other Eastern and Western European markets.

Granting of the syndicated loan to finance the present acquisition proves that local banks are ready to finance the business development of Lithuanian companies based on the best international practices and successful mutual cooperation,” states Vilius Juzikis, Member of the Board and Head of Corporate Banking Division at SEB Bank.

Jonas Urbonas, Head of Corporate Banking Division at Luminor Bank, notes that there are large transactions and there are systemic transactions that change the entire business conjuncture.

“To my mind Linas Agro is preparing to conduct the latter, so we are really happy to be a part of this process. The process will result in the creation of a champion of the Baltic States’ integrated agricultural and food production sector, who will become an even stronger competitor in the international market.

According to our observations, the competition in the above-mentioned business sectors has been transcending national borders for some time now and is taking place at the regional level, so the ability to offer a wide range of products will promote the establishment and growth in the entire Europe,” says J. Urbonas.

“Being a long-term financial partner of Linas Agro Group, we are happy to not only contribute to the financing of this transaction but also advise our client on the issues concerning the acquisition of the KG Group. We believe that this transaction will help the client to become a leading company in the region and give a competitive advantage in the export markets,” says Antanas Sagatauskas, Head of Corporate Banking Division at Swedbank in Lithuania.

AB Linas Agro Group together with the subsidiaries is a group of companies established in 1991 and carrying out operations in four countries: Lithuania, Latvia, Estonia and Ukraine. Over 2,100 employees work with the companies of the group. The consolidated revenue of the Group in the 2019/2020 financial year totalled 658 million euros.

The companies of the group engage in the production and trade in agricultural raw materials and food products, as well as supply goods and provide services to farmers. The group has its own network of grain elevators consisting of thirteen such facilities and is one of the largest exporters of Lithuanian and Latvian grain.

It is also among the leaders in Lithuania in the field of the supply of goods to farmers (certified seeds, fertilizers and agricultural machinery), as well as has a seed preparation plant. Furthermore, the group owns seven agricultural companies in Lithuania and is a large milk producer. In Latvia, the group owns four poultry companies: AS Putnu Fabrika Kekava, CIA Lielzeltini, SIA Broileks, and SIA Cerova.

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