FirstFarms, the Copenhagen-listed farm operator in eastern Europe, unveiled a Romanian purchase in a deal which will bring a Lego millionaire and one of Denmark’s biggest landowners as major investors.
FirstFarms revealed it had signed a letter of intent to buy AIC, bringing 2,430 hectares of Romanian farmland, a 6,000-tonne silo facility and a feed mill.
The deal - which will expand the group’s Romanian land portfolio to 7,900 hectares - follows the DKK 185m purchase in 2019 of a Slovakian pig operation, Hospoda Invest, and the DKK 59.7m acquisition of Czech pig-and-crop business Tjekkiet Invest in 2018.
With the group paying for its latest deal in 1.20m of new shares, plus a conditional payout equivalent to 50,000 shares 15 months after closing, Monday’s deal will give AIC’s owners a total stake equivalent to 16.5% of FirstFarms equity.
The current leading shareholder in FirstFarms is Henrik Hougaard, company chairman, who owns 1.09m shares according to Reuters data, equivalent to a 17.3% stake ahead of the issuance of the new shares.
AIC is owned by: Bendt Wedell, one of the largest owners of land in Denmark, at a reported 10,000 hectares; plus Ulrik Theophil Jørgensen, whose family own the celebrated Søllestedgård estate on Lolland island in eastern Denmark; and Anders Kirk Johansen, one of the heirs of the Lego fortune.
‘Scale and optimise’
FirstFarms said that the acquisition, which is expected to be completed in the April-to-June quarter at the latest, represented “primarily an investment in land and storage capacity”.
“Land prices in Eastern Europe are increasing, and with this purchase we invest in land… of very good quality with a range of potential applications,” said Anders Nørgaard, the FirstFarms chief executive.
The deal would also allow the group to “scale and optimise” its Romanian operations.
Furthermore, he said that in obtaining its new shareholders, “we gain access to important knowledge and experience”, which the group would “utilise for increased value creation in our entire business”.
Mr Wedell, the AIC chairman, said that after the deal, “as a larger shareholder, we want to contribute actively to the continued positive development” at FirstFarms, “both in a broad sense and on specific areas”.
He added that FirstFarms “has fully demonstrated that they are capable of operating and developing agriculture in eastern Europe.
“The foundation is good, the economy is good, and there is an ambitious plan for the future.”
FirstFarms shares closed down 2.6% at DKK 57.00 on Monday. Assuming the new shares were issued at this price, that would value the acquisition at a little over DKK 70m, or $10.3m.