Kernel might purchase Ukrainian Agrarian Investments holding

Ukraine’s leading sunflower oil producer Kernel (KER PW, KERPW) is in the final stage of acquiring the Ukrainian Agrarian Investments (UAI) holding company, Ukrainian media reported on March 31, citing anonymous sources.

In acquring UAI’s total land of 240,000 hectares, Kernel would boost its land bank to about 700,000 hectares, which would be the largest for a Ukrainian company.

Igor Zholonkivskyi: So far, we don’t know the probability of the deal to closed, as well as we don’t know whether UAI will be sold in full. In the best case, additional 240,000 hectares would result in incremental EBITDA of about USD 80 mln for Kernel (its FY2016 EBITDA stood at USD 358 mln), according to our estimates. While plans to expand its land bank have been previously articulated by the company’s management, the sheer size of a possible deal is likely to be viewed very positively by investors, who will be reassured of management’s ability to swiftly carry out its investment plans.