Avangard majority shareholder transfers stake to Ukrlandfarming

Avangard (LSE: AVGR LI, N/R) announced midday yesterday that its chairman and majority shareholder Oleg Bakhmatyuk transferred his stake in the company (77.49%) to Ukrlandfarming, which he controls 100%. Among potential benefits, the company listed: economies of scale by combing trading operations, decreased risk of input volatility (due to option to source fodder grain from Ukrlandfarming), cost synergies by coming usage of grain silos and marketing synergies. The transfer is expected to be completed within two weeks. Ukrlandfarming is one of Ukraine’s largest landholders and controlled a landbank of 480 ths ha as of June 30. Ukrlandfarming acquired controlling stakes in Ukrainian agricultural producers Rise and Dakor Agro Holding (UX: DAKOR UK, FSE: 4K1A GR; N/R) in early 2011. Yegor Samusenko: The ownership transfer itself should have no material impact on the company, as no effective change has been taken place. However, we note there might be a negative reaction by the market to confirmation that Avangard plans to use a related-party to reduce the cost of its grain purchases, one of its key cost components.