FINLAND – HKScan, a manufacturer of meat foods and products, is selling its business in the Baltic region to AS Maag group based in Estonia.
The deal for €90 million (US$96M) includes the company’s baltic subsidiaries namely, HKScan Latvia, HKScan Estonia and HKScan Lietuva.
The production units of HKScan in the Baltic region are located in Ravere, Tabasalu and Viiratsi in Estonia and Jelgava in Latvia with brands such as Rakvere, Tallegg and Rigas.
“The sale of the Baltic business will improve HKScan’s profitability and strengthen its balance sheet, In addition, the divestment will enhance our ability to improve our operational efficiency and to execute our long-term strategy of growing into a versatile food company,” said HKScan’s interim CEO, Juha Ruohola.
The previous CEO, Tero Hammila, recently resigned due to the pessimistic financial outlook of the company.
“The debt-free purchase price is €90 million, of which €20 million is conditional on the combined performance of the separately defined meat business and is subject to the transaction and Maag Grupp’s Baltic meat business in the following years,” the company reported.
In addition, €55 million of the fixed purchase price will be paid at the closing of the transaction, with the remainder over three years.
A statement from the company revealed that the business and personnel of HKScan’s Baltic subsidiaries will not be transferred to AS Maag Group until the transaction is over.
HKScan has had operations in the Baltics since 1998 with approximately 1500 employees. This divestment is expected to change HKScan’s financial structure and figures with the group net sales for 2022 decreasing by approximately €210 (US$223M).
Maag Group, on the other hand, is an over-25-year-old meat and dairy company that employs around 1000 people in Estonia, Poland and Finland.
It is known for its consumer brands Tere Farmi and Deary and it reported a total net sales of €233 million in 2021.
Roland Repp, chairman of the supervisory board of Maag Group was quoted saying, “The acquisition of HKScan’s Baltic business will help Maag strengthen its position and achieve the full synergies in the Baltic market, this will provide us all with better food security in turbulent times.”
All the operations in the Baltic units will be termed discontinued in HKScan 2022 full-year financial statements.
HKScan anticipates the transaction to close in the second half of 2023 subject to regulatory authorities’ approval.
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