Such a move of the group owned by businessman Jabar Kanani would be its second venture into the processing business, as it used to own a vegetable oil plant in Buzau at one time.
US-held Bunge (grain trade and vegetable oil processing) and Comfert (agribusiness and bakery) have similar business models.
“We are interested in the bakery and in the meat processing markets. We are looking at an acquisition opportunity or a partnership rather than at a greenfield project. We’ve been watching these two markets carefully for two years now,” Robert Arsene, general manager of Agricover told ZF.
The reason behind such an investment is to boost added value by processing the raw material Agricover gets from farmers. The company was in advanced talks to buy bakery business Pambac at the end of last year, market sources say, but the deal fell through. Pambac eventually went to Comfert.
Agricover’s interest in the meat and bakery industries is because of the difficult situation of the companies in these two sectors, which have received no major foreign investments.
“These are two extremely fragmented markets with family businesses with room for restructuring,” Robert Arsene said.
Agricover, one of the few agribusiness companies interested in regional expansion is now getting about 5% of its revenue, or EUR10 million, from Bulgaria. It went there three years ago but the business is progressing slowly.
“Growth is slow because it’s a different kind of market. We don’t get access to financial information of farmers that fast and many have traditional business relations that do not have to do with prices. They make certain decisions without taking into account the developments on the market.”
Under the circumstances, Agricover general manager said he did not intend to devise an expansion plan by infrastructure investment in Bulgaria and settled for seed, fertilizer and pesticide distribution operations.
Agricover posted EUR218 million revenue last year.
(English version by Loredana Fratila-Cristescu)