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20 August 2017
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Kernel acquisition

 

 In May, the largest M&A acquisition in the agrarian sector since the start of the year will be completed when Kernel holding owned by Andriy Verevskiy nominally increases its land pool by nearly 120,000 ha, KW wrote this week.

Kernel Holding S.A. has entered into a call option agreement for the acquisition of a 100% stake in two farming companies in Ukraine, which together process 120,000 hectares of land. The company said in an official statement on April 27 that it manages 79,200 ha of leasehold farmland in the Khmelnytskiy Oblast and the other 40,000 ha in the Poltava Oblast.

These new ag companies will expand the total farm land under management to 330,000 ha, Subject to approval by the Antimonopoly Committee of Ukraine, Kernel will pay US $98 mn for the farmland leasehold rights, storage capacities, machinery and working capital, of which US $61 mn will be paid at closing and the remaining US $37 mn upon fulfillment by the sellers of certain obligations.

Kernel does not specify the names of the companies it is buying, but it is known that earlier the holding management company was in negotiations about the acquisition from the British Finch Investments Fund of Enselco ag company, the assets of which are concentrated in the Khmelnytskiy Oblast.

Many holdings, whose shares are quoted on western stock exchanges use a similar strategy and lavishly spend money for the acquisition of assets that are already registered under the names of their Ukrainian founders. For example in 2011, the Luhansk agrarian holding company Agroton, in which its founder Yuriy Zhuravlev owns less than 50% shares (over half of them are quoted on the WSE), announced the acquisition of two farming companies with 20,000 ha of land for nearly US $15 mn. At least one of them (Gefest Ltd.), according to KW sources, was owned by his wife Valentyna Zhuravleva since 2010.

Ukraine’s agrarians can continue not economizing on the cheap money attracted from Europe, the article concludes.

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