Finland-based food group HKScan has announced it is to sell its business interests in the Baltic region to Estonian peer Maag Grupp.
The move comes less than two months after the firm’s CEO Tero Hemmilä stepped down amid a gloomy financial forecast.
HKScan said in September “urgent measures” were necessary to “improve the profitability of the core business and to strengthen the balance sheet”. In August, the group, which markets meat and convenience foods, announced the prospect of more than 100 job losses at its Forssa plant in Finland as part of an initiative to “improve cost efficiency and competitiveness”.
Today (14 December), HKScan has signed an agreement to sell the shares in its Baltic subsidiaries AS HKScan Estonia , AS HKScan Latvia and UAB HKScan Lietuva for EUR90m (US$95.8m).
Some EUR20m of that purchase price is conditional on the combined performance of the firms’ Baltic meat businesses in the coming years.
HKScan interim CEO Juha Ruohola said: “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.”
The Finnish firm – which has operated in the Baltics since 1998 – said the divestment will “change HKScan’s structure and financial key figures”.
The Baltic business will be transferred to discontinued operations in HKScan’s full-year 2022 financial statements. As a result of the transaction, the group’s net sales for 2022 are expected to decrease by approximately EUR210m, although EBIT is expected to improve by approximately EUR26m.
The transaction is expected to be closed in the second half of 2023 and it is subject to regulatory approvals in Estonia and Latvia. The businesses and personnel of HKScan’s Baltic subsidiaries will not be transferred to Maag Grupp – a food company operating in the meat and dairy sectors – until the closing of the transaction.
HKScan’s Baltic production units are located in Rakvere, Tabasalu and Viiratsi in Estonia and Jelgava in Latvia. The company’s consumer brands in the Baltics are Rakvere, Tallegg, Rigas Miesnieks , Jelgava and Klaipedos Maistas.
In 2021, net sales for the Baltic business amounted to EUR170m.
Maag Grupp’s net sales in 2021 totalled EUR233m. It employs some 1,000 people in Estonia, Poland and Finland.
Roland Lepp, chairman of Maag Grupp’s supervisory board, said: “The acquisition of HKScan’s Baltic business will help Maag strengthen its position and achieve the full synergies in the Baltic market.”
