Danish Agro subsidiary, Baltic Agro Latvia, has acquired 60% of the shares in agribusiness and specialist feed company, Tukuma Straume, which is located near Riga in Latvia.
The deal includes an agreement to acquire the full company – the remaining 40% of shares - at a later stage.
Danish Agro subsidiary, Baltic Agro Latvia, specializes in the sale of fertilizer, plant protection, ingredients and vitamin mixes, feed mixes, seed, energy and rapeseed mill management.
“We wanted to do it like that to ensure the managing director, who owns 50% of Tukuma, can support us during the transition period,” CEO of Danish Agro, Henning Haahr, told FeedNavigator.
Tukuma Straume has 85 employees and is active within traditional agribusiness, feed production and grain intake. It also has a specialist factory producing feed for livestock and pets. It has total warehouse capacity for ingredients of 45,000 tons and 100,000 tons of grain storage capacity.
It recorded €9.312m in sales in 2016, according to Firmas.lv business database.
The sale is contingent on approval from the Latvian authorities.
Extended production and storage capacity
Both the extended grain storage and compound feed capacity of Tukuma Straume appealed, said the Danish Agro CEO.
While Baltic Agro has significant, well established production facilities in Latvia, its existing compound feed infrastructure is at full capacity so the acquisition will alleviate pressure in that regard, said Haahr.
“Tukuma Straume’s grain facilities are located quite close to the export facilities in Riga harbor, and the facilities in Daugavpils supports us in an area in the south east in Latvia, where we don’t have any grain facilities at the moment.”
Tukuma Straume’s pet food manufacturing activities is also of interest.
“Today, our group sells pet food but we don’t produce it.”
The deal then gives Danish Agro the opportunity, he said, to strengthen its position within pet food production in Latvia and the group's other subsidiaries.
Baltic business
Haahr said the Baltics market is developing at a good pace.
“Farms are getting bigger and more professional.”
Danish Agro has had a presence in the Baltics since 2006. “We are the market leader there. We have total sales of over €700m if we consider the agribusiness and the machinery business combined.”
In terms of further asset building in that region, the CEO said, “We have a strategy around the Baltic Sea area countries meaning Denmark, Norway, Sweden, Finland, Estonia, Latvia, Lithuania, Poland and the north part of Germany. We follow closely what is going on there, to see if there is any acquisitions of interest. At the moment though, we are mainly focused on consolidation and utilizing synergies across the existing activities in the group."