“Cargill and Ameropa are negotiating the takeover of Agricover. The interest of the two companies for such a takeover is the distribution of input (pesticides, seeds, fertilizers i.e.),” says a source close to the talks.
Agricover supplies seeds, pesticides and fertilizers to farmers and then buys their harvests. If it goes through, the transaction will be one of the most important moves of this kind on the local market of raw material trade. The market value of Agricover is EUR50-70 million, according to ZF calculations.
One of the leading factors that could prompt the two global giants to go through with the acquisition of Agricover are the silos held by the company, which are located in strategic locations such as Buzau, Olt, Dolj and Calarasi counties – where major grain producers are based. Moreover, Agricover has a much more significant presence on the fertilizers and seeds market than Cargill and Ameropa.
“For Agricover an exit from the business in southern Romania is an interesting move as they saw the advance of multinational traders. So they don’t want to get into a fight they will not win,” said the same source.
On the other side, Robert Arsene, general manager of Agricover, was the only official of one of the three companies to firmly deny the information. “There have not been nor will there be any negotiations on this subject.”
At the same time, one Ameropa representative said nothing was known about such a transaction and that these are just market rumors.
Cargill officials did not, however, deny the information. Representatives of the US trader only said: “we are not commenting rumors or speculations.”
Ameropa’s first expansion outside Constanta
If Ameropa were to take over Agricover, the transaction would mark the Swiss trader’s expansion outside Constanta county, where it has silos and grain storage facilities with an overall capacity of over 500,000 tons.
The acquisition of Agricover would be a surprising move because Ameropa recently took over fertilizers producer Azomures following a transaction put at around EUR100-EUR150 million. In short, Ameropa would be interested in the takeover of Agricover because Ameropa now controls the largest fertilizers producer on the local market, but does not have a nationwide distribution network for farming input considering that Ameropa’s activity is exclusively focused on Constanta county.
A strategic move for Cargill as well
On the other hand, if Cargill took over Agricover, the US company would strengthen its presence in several counties in southern Romania, where they are either not present or facing strong competition from other multinationals.
If Agricover were to move under the control of one of the multinational traders, this would remove from the top five ranking of raw materials traders put together by an Azeri entrepreneur who can be considered a local one after an 18-year presence in Romanian business.
Agricover, controlled by Azeri businessman Jabar Kanani, came to life 12 years ago through the merger of Comcereal Buzau and vegetable oil producer Ulvex. Agricover ended last year with turnover of EUR217 million.
(English version by Daniela Stoican)