The parties will each hold a 50% share in the Finnish joint venture. The idea is to deliver greater profitability and efficiency to livestock producers in both Finland and the surrounding regions.
Kärki-Agri, located in Seinäjoki, and founded in 1996, serves the Finnish cattle sector. Its portfolio includes animal health products, specialty feeds and feed preservatives. The company also opened a premix plant in 2015, where it produces custom feeds and Nutrilix specialty blocks.
In 2017, Alltech and DLG set up a joint venture to acquire AV Nutrismart Holdings, a premix business located in Orenburg, south of the Ural Mountains, in Russia.
“With this second joint venture with Alltech, we will strengthen our position and presence in Finland. The synergies created through this cooperation will give customers better access to products that, by optimizing feed efficiency, improve production economy and increase their competitive advantage,” said Jacob Holm Pedersen, executive vice president, DLG, with responsibility for premix and nutrition.
Headquartered just outside of Lexington, Kentucky, US, Alltech has a strong presence in all regions of the world. The company's well established expansion strategy has been to pursue collaborations in new markets focused on growth. Dr Mark Lyons, CEO of Alltech, said this new partnership will once again see the combination of DLG’s excellence in premix manufacturing with Alltech’s cutting-edge feed additive technology deliver for farmers in Finland and neighboring markets.
Kärki-Agri has been a customer of Alltech for over 20 years, and that relationship has given the company a long term view of the opportunities in Finland. "The size of the farms and the distances between them make distribution in Finland challenging, which is why Karki was such a good fit for us," Patrick Charlton, VP of Alltech Europe, told FeedNavigator.
So why pursue a JV, why didn't Alltech simply acquire this company independently? "The successful experience of our first JV with DLG in Russia has shown us that, by combining the expertise of the two parent companies, we have been able to achieve more together. Because the Karki business is largely based on premix, it was a natural decision to work together again on this project," he added.
Alltech said the AV NutriSmart JV with DLG has been a huge success: "DLG has significant knowledge and footprint on premix manufacture across Europe, and Alltech already had a well-established sales team in Russia. By combining these attributes and recognising the strengths that each party brings to the business, we have been able to grow the business significantly over this time. Both companies believed this was a good way to develop in this market, but the results have been beyond our expectations. We feel confident this success can be carried over into the new JV with Karki."
The DLG Group (DLG) is one of the largest European farm supply businesses and is owned by Danish farmers. It has a turnover of €6.9bn (US$8.3bn) and 6,600 employees in 18 countries. DLG supplies farmers with feed, animal vitamins and minerals, seed grain, and fertilizer. In addition, it has a significant business in the areas of grain trading and plant breeding.
In May 2019, DLG's premix and nutrition business, Vilofoss, acquired the Spanish animal nutrition company, CPC. The Spanish market is Europe's largest in terms of pig production and that deal provided Vilofoss with a completely new growth market.