Greenyards acquisition should strengthen its position in the mushroom market

Greenyard's acquisition should strengthen its position in the mushroom market

Greenyard Foods has acquired Polish mushroom substrate group Mykogen in what it described as a "transformational transaction" for Greenyard that it believes will strengthen its position in the mushroom market.

The deal, struck with current owner PE group Abris CEE Mid-Market Fund II, includes a purchase price of around EUR93m (US$104m). 

In 2016, the firm generated EBITDA of 13.5m. This implies a trailing purchase price multiple of 6.9x EV/EBITDA. During the last four years, Mykogen's sales growth has exceeded 8% per annum with FY 2017 sales expected to approach EUR40m and EBITDA margins above 35%, Greenyard added.

Greenyard is financing the transaction from existing credit facilities.

Substrate is the "key and highest value-added raw material" used in mushroom production and Mykogen's growing media are "essential in producing high-quality mushrooms" in the growing production markets of Central and Eastern Europe, Greenyard said. 

The majority of Mykogen's operations are in Poland, Europe's largest mushroom producer. Mykogen has four "state-of-the-art" production facilities, located in Poland and Ukraine.

Announcing the deal, Greenyard said the addition of Mykogen "enhances its direct connection to the grower" by making Greenyard a supplier, increases its access to mushrooms and "strengthens" Greenyard's position in the mushroom market place.

The company added the agreement will create opportunities for cross-divisional synergies with the fresh, frozen, prepared and horticulture divisions within Greenyard. The deal also raises the profile of Greenyard's horticulture business "positioning it for further strategic development". 

CEO Marleen Vaesen commented: "The addition of Mykogen fits perfectly with our objective to have a vertical chain derived from Greenyard's 'fork-to-field' strategy, whereby we ensure consumers can enjoy fresh quality products. Together with Mykogen, our horticulture business takes an important step forward within our group with multiple opportunities for future synergies." 

Greenyard also revealed it intends to sell off some "non-core" interests in its fresh business. Without offering further detail, the company said these divestments are estimated to provide cash proceeds of approximately EUR25m with a "limited impact" on EBITDA.