Kernel to sell a sugar unit for USD 33 mln

Kernel Holding reported on May 7 it signed a binding agreement to sell its Chortkiv Sugar Plant and a local sugar trading entity at a total consideration of “up to USD 32.5 mln.” Earlier, several local mass media reported that Germany’s Pfeifer & Langen is in the negotiations to purchase the Chortkiv plant.

Alexander Paraschiy: Not only is the news in line with Kernel’s strategy to exit the sugar business, but the deal looks like a bargain for the sunflower oil giant. Kernel reportedly bought Ukrros (the owner of Chortkiv and three other sugar plants) at an equity value of USD 59 mln back in 2011. The Chortkiv sugar plant, with its daily beet processing capacity of 7 kt, comprises 31% of Ukrros’ total sugar capacity, so its contribution to Ukrros’ value (based on the 2011 deal price) should have been about USD 18 mln. 

The Chortkiv Sugar Plant is the largest sugar facility in the Ternopil region, where all the other facilities are controlled by Huta family, the owners of Mriya Agroholding (MAYA GR). The Huta family is unlikely to become the buyer of the plant, as it is hardly willing to pay the mentioned price. The Ternopil region will likely get a new powerful sugar player (as we are inclined to believe that Pfeifer & Langen is a potential buyer) but we don’t see the postion of incumbent Mriya could be affected.