Origin to buy Polish firm Kazgod in €22.4m deal
Irish agricultural group Origin Enterprises is continuing on the acquisition trail after agreeing a €22.4m deal for Polish agri-services business Kazgod group.
Origin will first pay €20.3m for the firm, with the remaining €2.1m to be deferred for three years. Kazgod, which specialises in agronomy services, inputs and crop marketing, employs over 200 people and has about 2,600 customers across central and eastern Poland.
For the year to the end of 2014 it had sales of €200m and earnings before interest and tax of €1.2m.
Origin said that the acquisition will augment the company's existing existing Dalgety subsidiary in Poland, which is principally concentrated in western Poland and has about 3,500 customers.
Origin chief executive Tom O'Mahony said the acquistion gives Origin the potential to expand significantly in eastern Europe. "The combination of Kazgod and Dalgety will bring benefits through new customer extension opportunity and an enhanced capacity for the development of new and innovative service propositions," he said.
The buy is Origin's second in as many months after it acquired two Romanian-based agronomy businesses at the end of July.
Origin announced the deal to buy Redoxim for €35m and Comfert for €19.4m at the same time that it announced the dispoal of its interest in Valeo Foods.
The 32pc stake was sold to London-based private equity company CapVest Partners for a total cash payment of €86.6m.
Both the acquisition of the Kazgod Group and the two Romanian businesses will be funded from the proceeds of the Valeo Foods divestment.
The acquisition of Kazgod was praised by analysts, who said that Kazgod compliments Dalgety's existing operations in Poland.
Liam Igoe, an analyst for Goodbody Stockbrokers, said that the deal should "double the scale of Origin's presence in terms of sales and also market share".
He added: "While the acquisition will be earnings per share (EPS) neutral in the 2016 financial year, we believe there is substantial scope for margin enhancement over the next three years and the acquisition will be incremental to EPS in time."
Last year Origin had revenues of €1.4bn and made an operating profit of €93m. When these latest acquisitions are fully integrated into the business, it is likely that they will increase annual turnover to around €1.7bn.