Alpcot shareholders endorse Landkom acquisition

Alpcot Agro (ALPA SS) shareholders approved the acquisition of Landkom International (LKI LN) and the issuance of new shares to raise USD 20.0 mln at an EGM on January 9, Landkom said yesterday. The friendly bid by Alpcot Agro (see our news dated December 21, 2011) is subject to the approval of Landkom’s shareholders and the High Court of Justice of the Isle of Man, both of which are scheduled for January 23, and then by Ukraine’s Antimonopoly Comittee. Landkom CEO Neil Balfour said acquisition by Alpcot would ensure repayment of outstanding payables of USD 15.7 mln to Amako Ukraine LLC and facilitate the attraction of new bank loans.

Yegor Samusenko: The deal will clearly be beneficial for Lankom and its top management (Amako, the expected recipient of USD 15.7 mln from Alpcot, was previously run by Landkom’s current CEO and currently hosts Landkom’s headquarters in Ukraine). Benefits for minority shareholders are less clear: both Landkom and Alpcot are among the least efficient listed agriculture companies in the CIS. The exchange of shares in one inefficient company (Landkom) into shares of a larger inefficient company does not look like a bargain for investors. Nevertheless, given Landkom management’s aggressively positive position on the deal, we believe the merger has a high chance of approval by the company’s shareholders.