AgroGeneration farming group announced it will soon merge with Harmelia, a 70,000-hectare farming operation in eastern Ukraine owned by private equity buyout fund SigmaBleyzer Fund IV, according to Dragon Capital.
The merger will bring
AgroGeneration’s land bank to 120,000 hectares, up from its current 50,000
hectares.
In a note to investors,
Dragon Capital said the “deal
envisages transferring to AgroGeneration 100 percent of Harmelia’s shares, while SBF IV will be
awarded 57.2 million new shares in AgroGeneration, or 62 percent of the capital of the new group following the
merger.”
Agrogeneration has been listed on the New York
Stock Exchange’s Alternext platform in Paris since 2010. The reported valuation
for the merger suggests a premium of around 28 percent compared to the
company’s current share price, the Dragon Capital note added.
With operations in Ukraine and Argentina, the deal
will diversify AgroGeneration’s farms across climatic zones. The potential
risk, according to Dragon Capital, is that this may pose logistic issues.
“The
merged company plans to produce up to 400,000 tons of crops and earn
20 million euros in earnings
before interest, taxes, depreciation, and amortization based on current agricultural
commodities prices,” the
investment bank’s analysts wrote.
AgroGeneration grows wheat, corn, barley and rapeseed.
In 2012, the company’s total grain and oilseed production rose by 27 percent
year-on-year to 207,500 tons.
Kyiv Post editor Mark Rachkevych can be
reached at [email protected].
