ORIGIN ENTERPRISES, the IEX-listed agri-nutrition and food company, is to expand its operations in eastern Europe following its acquisition of a 20 per cent stake in Continental Farmers Group.
The company, which was spun off from food group IAWS last year, paid €12 million for the stake in Continental Farmers, a large-scale producer of high-value agriculture crops operating in Poland and the Ukraine. Origin raised the funding through existing bank facilities and it will appoint two representatives to the board of Continental Farmers.
Continental Farmers plans to use the funds invested by Origin to accelerate the expansion of its farming business in the Ukraine.
Continental Farmers Group is a private limited company owned by chief executive Mark Laird and a number of other investors. It employs 100 people in Poland and the Ukraine. Its Ukrainian holdings are currently located around L’viv in the northwest of the country, while the headquarters of the Polish operations are in Swincz, near Gdansk.
“Continental Farmers is developing a sustainable farming operation in eastern Europe combining the benefits of a proven management capability and strong customer relationships. Extensive farming experience in eastern Europe since its foundation in 1994 ideally positions the company to manage scaleable growth in the Ukraine,” said Origin chief executive Tom O’Mahony.
Origin’s investment in Continental Farmers will provide geographic extension opportunities for Masstock, the firm’s agronomy and farming systems advisory business. Origin acquired Masstock in February 2008 and it already has holdings in Poland as well as the UK. The firm has just appointed former CEO of Masstock Declan Giblin as head of business development, and it sees the eastern European market as being key.
Davy Stockbrokers welcomed the move: “The Ukraine is one of the remaining great underdeveloped agricultural opportunities to capitalise on the current global food supply-demand tightness.
“As well as being prospectively profitable in its own right, Poland/Ukraine represents a new stage on which Origin can deploy its capabilities in agricultural inputs, particularly those of the recently acquired Masstock Arable. Although we do not anticipate a significant immediate earnings accretion . . . this does not dissuade us from the belief that it is a smart development for Origin,” the firm said in a research note.
Shares in Origin closed up five cent to €5.00 in Dublin yesterday on the back of the news.
