Agricultural Trade in Germany: Setting a New Course
AGRAVIS Raiffeisen AG, together with its Danish partners, Danish Agro and Vestjyllands Andel (formerly DLA), is planning to bring about a change in the German agricultural trade landscape: The joint venture DAVA AGRAVIS International Holding A/S (formerly DLA AGRAVIS International A/S) is acquiring – subject to the approval of antitrust authorities – the agricultural trade business of Getreide AG, based in Rendsburg, as of 1 February 2015.
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- Through the acquisition of Getreide AG's agricultural trade activities, AGRAVIS, together with its Danish partner DAVA, will be able to expand its market position in Mecklenburg-Western Pomerania, amongst other areas – pictured: Nordkorn Saaten GmbH in Güstrow.
"The acquisition will enable us to strengthen our core competence and to grow our core agricultural trade business by around 1 billion euros", Dr Clemens Große Frie, CEO of AGRAVIS Raiffeisen AG, based in Münster and Hanover, makes clear. And Christian Junker, CEO of Danish Agro , adds: "Following intensive, fair negotiations, new momentum is emerging in European agricultural trade – particularly in the north of Germany".
Getreide AG will remain active in the market as Getreide AG, focusing, among other things, on industrial activities in rapeseed processing, the manufacture of malt and wholesale trade in grain and oilseeds.
DAVA AGRAVIS International will acquire a corporate group including eleven companies and more than 70 sites – in Schleswig-Holstein, Mecklenburg-Western Pomerania, Brandenburg, Saxony, Saxony-Anhalt and Lower Saxony, among others. The Danish-German joint venture, in which Danish Agro and Vestjyllands Andel (DAVA) hold a 75 percent interest and AGRAVIS Raiffeisen AG a 25 percent interest, is taking over "Agrarhandel Schleswig-Holstein GmbH", "Landhandel Gransee GmbH", "AMV GmbH" and "Nordkorn Saaten GmbH" as well as "Vollkraft Mischfutterwerke GmbH". "Agro Handel" in Hungary is also part of the acquisition package.
In addition to the collection sites and mixed feed plants, deep-water port and harbour sites, a seed business as well as fertilizer and crop protection warehouses are part of the acquisition. All parties agreed not to disclose the purchase price.
"The acquisition will enable DAVA AGRAVIS International Holding to continue to grow and extend its European market position", Junker clarifies. The plan is to position the acquired agricultural trade business of Getreide AG on the market as an independent holding company under the aegis of DAVA AGRAVIS International. At the same time, the synergies that result for AGRAVIS on the one hand and DAVA on the other will be utilized. "We will take on the employees and intend to continue our growth strategy. We have increased interest in raising our effectiveness and in expanding our position", says Große Frie in giving reasons for the takeover.
What is planned, according to Junker and Große Frie, is to decentralize the acquired units and employees and to combine them in a new holding company – in the legal form of a public limited company. The new ownership structure cannot be implemented until the antitrust authorities give their approval. According to the two CEOs, the new name of the company and the management structure are expected to be settled this year.
The acquisition, which represents a revenue volume of around 1 billion euros and around 550 jobs, will change the European and German agricultural trade landscape significantly. "An acquisition like this will cause quite a stir on the market – all market participants, particularly agriculture and agricultural farms, will benefit from it", Große Frie makes clear. Both AGRAVIS and DAVA, he says, are strong and reliable partners of agriculture in their domestic markets, which is why Junker hopes "that not only agriculture, but also the consuming industry, processors and exporters approach the new owners with trust". Große Frie therefore emphasizes: "We are sure that, together with customers and suppliers, we will be able to develop the existing locations and processes effectively for all concerned, using AGRAVIS and DAVA structures".
The managers of DAVA AGRAVIS International Holding expect growth and momentum not only in the collection trade, but also in the operating resources and feed business, as the acquisition package includes mixed-feed production capacities of 450,000 tonnes as well as a seed wholesale business and crop protection warehouses. Both Junker and Große Frie agree, in general, that the investment, which is in regions in which they have had only limited market penetration up to now, can be successfully implemented.
As early as the end of last year, DAVA AGRAVIS International Holding had acquired an agricultural trading location in Slupsk, in the north-west of Poland, with storage capacities of 50,000 tonnes. The plant had previously been operated by Getreide AG since the year 2000. Recently, in July 2014, AGRAVIS and DAVA had announced that their joint venture activities with Vilomix Holding A/S would be expanded. AGRAVIS thus increased its shares in Vilomix Holding A/S from 15 to 25 percent and, at the same time, Vilomix Holding A/S took a 25 percent interest in the AGRAVIS investee HL Hamburger Leistungsfutter. Both companies operate in the internationally growing market for mineral feed and want to expand their export activities through the investment.
DAVA AGRAVIS International Holding – created in 2012 as a joint venture between the Danish companies Danish Agro and Vestjyllands Andel (DAVA) and AGRAVIS – generated annual revenues of around 500 million euros in 2014 by consolidating agricultural trade and agricultural technology in Eastern Europe. The current acquisition will mean that revenue of the joint venture will increase to around 1.5 billion euros.
AGRAVIS, together with its Danish partner DAVA, is planning to take over Getreide AG's agricultural trade activities. AGRAVIS CEO, Dr Clemens Große Frie, was interviewed about this takeover.
When is the deal expected to take place?
Große Frie: Intensive negotiations have taken place over the past few weeks and contracts signed on Saturday – and we are sure that, with the takeover, which, of course, still needs to be approved by the antitrust authorities, we are making a major joint step in terms of growth. The deal is expected to take effect as of 1 February, 2015.
The buyer is DAVA AGRAVIS International – that is to say, your joint venture with the Danish DAVA. The acquired activities, however, are virtually all in Germany; why did AGRAVIS not make the acquisition alone?
Große Frie: AGRAVIS has grown considerably over the past few years – this deal also underscores that. Nevertheless, the prospects of continuing the acquired locations and business together with DAVA in the DAVA AGRAVIS International joint venture are promising from our perspective, and we firmly believe in the efficiency of a functioning alliance.
Furthermore, there is also an economic context – we have reduced the risk for both parent companies in the joint venture and the investment is also shared.
Getreide AG's agricultural trade activities generate revenues of around 1 billion euros, but the companies are largely in AGRAVIS' area of operation: Are you not going to compete with one another – even in view of the fact that the joint venture is with a Danish partner?
Große Frie: The facts are all correct – we are talking about revenues of around 1 billion euros, which will be acquired through the acquisition, and it is also true that the locations are mainly in the north and east of the Republic. However, we still have growth opportunities in Schleswig-Holstein and Mecklenburg-Western Pomerania, for example, as we have been operating in the market there up to now only through a very small number of subsidiaries and investees. The opportunities that may now arise as a result of the takeover involve good prospects of gaining a foothold even faster in the regions mentioned. Moreover, the purchase also includes deep-water port and harbour sites that are strategically important for marketing grain and oilseeds. Synergies between all the partners arise here.
How will Getreide AG's agricultural trade activities be integrated into the joint venture?
Große Frie: First of all, we need to wait for the decisions of the antitrust authorities. After that, our idea is for Getreide AG's current agricultural trade activities to be positioned independently under a new name in the form of a public limited company under the aegis of DAVA AGRAVIS International AG. That also requires us to keep the employees and to want to invest in growth.