Target Information

Galinta, managed by the INVL Baltic Sea Growth Fund, has entered into an agreement to acquire 100% of the shares of Cenos, a leading manufacturer and distributor of salt, rice, and other grains in Poland. With Cenos being one of the largest producers and distributors of grains in Poland, this acquisition underscores Galinta's ambitions to expand its market presence abroad. Furthermore, Galinta has also completed the acquisition of Ekofrisa, a Lithuanian company specializing in the production of buckwheat grains and related products.

Founded over 30 years ago, Cenos has established itself as a significant player in the Polish market, generating 98% of its annual revenues from local sales. Over the past three years, the average annual revenue for Cenos has been approximately €37 million, and the company employs around 150 individuals. Cenos's product portfolio includes rice, grains, peas, beans, and cereals, and the company’s brands are recognized as market leaders in their respective categories within Poland.

Industry Overview in Poland

The grains and cereals sector in Poland has seen remarkable growth, spurred by rising consumer demand for health-conscious food options. Over recent years, the sector has become increasingly competitive, requiring companies to adapt to shifting consumer preferences, regulatory changes, and market dynamics. The advent of clean label products and organic grains has created an opportunity for innovation and market expansion.

Moreover, the increasing focus on sustainability and environmental stewardship has influenced producers to adopt greener practices and technologies, enhancing their operational efficiencies. In this context, companies that can effectively leverage such trends stand to benefit significantly. As a result, industry players are often compelled to pursue regional consolidation strategies to bolster their market positions.

In addition, with the rise of e-commerce and online grocery shopping, manufacturers are presented with new channels for sales, demanding a strategic approach to distribution and marketing. These changes are steering companies toward adopting more robust digital solutions and e-commerce strategies to capture a broader customer base.

Rationale Behind the Deal

The acquisition of Cenos is strategically significant for Galinta as it aims to accelerate its growth within the Polish market. By acquiring a well-established brand, Galinta is poised to not only strengthen its product offerings in the rice and cereal segments but also expand its portfolio to include a new product category - edible salt. This move will enhance Galinta's revenue streams and market presence in Poland.

The acquisition of Ekofrisa complements this strategy by unlocking additional avenues for growth in the business-to-business (B2B) export markets. By tightening its focus on core operations and consolidating its position as a key player in the industry, Galinta is ramping up its competitiveness and long-term profitability potential.

Investor Information

The INVL Baltic Sea Growth Fund, with a size of €165 million, is one of the leading private equity funds in the Baltic region. It is backed primarily by the European Investment Fund (EIF), which has committed €30 million to support its investments. The fund aims to capitalize on growth opportunities within the Baltic states and target companies that exhibit substantial growth potential.

Managed by the well-regarded Invalda INVL group, the fund has more than €1.9 billion in assets under management. The investment philosophy emphasizes a long-term growth strategy, focusing on sectors like fast-moving consumer goods (FMCG) where Galinta operates. With strong management expertise and a robust market presence, the fund is well-positioned to realize value through strategic investments.

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This acquisition can potentially be a good investment for Galinta, given both companies' established market positions and the growth opportunities prevailing within Poland’s grain sector. The integration of Cenos into Galinta's operations may lead to enhanced efficiencies, broader distribution capabilities, and improved market awareness.

Furthermore, entering the B2B export market through Ekofrisa's acquisition opens up significant potential for growth outside the Polish market. Expanding the product range to include well-known brands like Cenos could favorably impact revenue diversification and mitigate risks associated with market volatility.

Nevertheless, careful management will be essential to successfully execute the integration of these new acquisitions. Effective operational integration, marketing strategies, and branding initiatives will be crucial for capitalizing on these assets and ensuring sustainable growth.

Overall, if managed appropriately, this acquisition strategy could position Galinta as a formidable player in the regional grains market, leveraging strong brand recognition and an extensive product portfolio to facilitate future expansion.

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