Bunge Romania, the biggest company on the vegetable oil market is poised to increase its market share to 40% after integrating the recently acquired oil unit of Agricover, says Michael Whitney, general manager with Bunge Romania.
"We bought the oil unit of Agricover principally for two reasons. First of all, we liked the way the company had developed in recent years and secondly the brands hold strong positions on the market," stated Michael Whitney.
The vegetable oil unit of Agricover includes 5 brands; Ulvex, Soreanca, Rumen, Universal and Mythos, with the first two brands covering approximately 10.3% of the market, according to Ovidiu Chiscan, the general manager of Agricover.
"We were the market leaders before the acquisition, but owning the vegetable oil unit of Agricover will significantly boost our market share," explained Whitney. According to estimates provided by Whitney, before purchasing the Agricover unit, Bunge held around 30% of the vegetable oil market. However, in the wake of the acquisition, Bunge has increased its domestic market share to a figure of more than 40%.
"We will not sell the plant in Buzau as it is a key location in our business. We now have plants located in the northern and western parts of the country and will also be able to distribute to the eastern part of the country owing to the new acquisition," explained Whitney.
In addition, Whitney said he planned to operate some minor investments in the Buzau plant, in particular the modernisation of the production centre, but chose not to disclose the value for these investments.
Whitney also declined to offer any information on the value of the deal between Bunge and Agricover, but market sources say it might be about 8-10 million euros.
The general manager added, however, that the partnership between Bunge and Agricover would go beyond the acquisition of the Buzau vegetable oil unit.
After selling the vegetable oil unit, Agricover representatives stated they would leave the vegetable oil market and focus exclusively on the agribusiness segment, with the company currently holding a network of silos and storage facilities with an overall capacity of 700,000 tonnes spread over several counties. The group also owns a unit specialising in seed production, a grain and oleaginous products unit and a distribution unit through the recently acquired Suntory firm. As part of its agribusiness development strategy, the group plans to become the most important integrator in southeast Europe within the next three years.
In recent years, most vegetable oil firms have seen profits fall despite the bigger volumes delivered onto the market. This is why the main oil producers have made the decision to either focus on bio diesel production or enter the agribusiness segment.
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