The agricultural sector is not new territory for Infortar. Last year, the company acquired a majority stake in one of Estonia's largest dairy producers, located in Halinga, Pärnu County. According to Hanschmidt, the purchase was aimed both at developing agriculture and producing biogas.

At the end of last year, Joakim Helenius, head of Trigon Capital, announced plans to purchase Estonia Farmid. The deal, which was then described as the largest in Estonia's agricultural sector, ultimately fell through when the bank that had promised co-financing withdrew at the last minute, citing significant risks, according to Helenius.

Hanschmidt said that as early as last year, Infortar had been exploring opportunities to expand in Estonia's agricultural sector once it became clear that the owners of Estonia Farmid were looking to exit the business. "But we thought we wouldn't expand further until we understood whether we would be successful in Halinga or not," he noted.

Based on the first year's results in Halinga, Infortar's CEO said the business had performed well.

"When we heard last year that the owners of Estonia [Farmid] wanted to exit the business, we got in touch with them. But it seemed to us that the prices were too high at the time, so we didn't make any serious offers," Hanschmidt said.

Two months ago, after Helenius' deal collapsed, Infortar approached Estonia Farmid again. "We realized that the price range was reasonable, incorporated it into our business plan and saw that it was possible to build a viable business and further develop the company," Hanschmidt explained.

Hanschmidt: Agriculture competitive in Estonia's latitude

For now, Hanschmidt said, the primary plan is to grow and expand in agriculture. Combined, the Halinga and Estonia farms could generate revenues exceeding €30 million. Together, the two companies have approximately 8,500 cows and young cattle and about 14,000 hectares of land. Currently, the farms produce over 13,000 liters of milk per cow annually.

According to Hanschmidt, this means that Infortar-owned companies will account for about 5-6 percent of Estonia's total milk production.

Hanschmidt emphasized that agricultural producers in Estonia's latitude can compete effectively on the international stage. "Especially in dairy production. If we look back to when the price of milk was €200 per ton, today it has already exceeded €500 per ton. In reality, there's potential to export dairy products as well," he noted.

The agreement for the acquisition was signed on May 2, and the parties are now awaiting approval from the Competition Authority to finalize the deal.

According to Infortar, Swedbank is helping to finance the purchase. The parties have not disclosed the transaction price, and Hanschmidt said more details about the financing structure and Swedbank's specific role will be shared once approval from the Competition Authority is received.

Jaanus Marrandi, a member of Estonia Farmid's management board, said the decision to sell the company had been under consideration for a long time and was based on economic logic. According to him, the company is well-capitalized and in good condition but would require additional high-risk investments in order to grow.

"As owners, we were reluctant to take on such significant risks to embark on a new round of investments. In fact, we are all over 60 years old and our risk appetite has somewhat diminished. We don't see a realistic chance to enjoy the fruits of our labor in the future, and the company's real value might not necessarily be higher in 10 years than it is now. At the same time, the golden rule of business is that a company must continually invest and grow its revenue — it's a never-ending cycle," Marrandi explained.

"We believe that the most important thing is the company's development and certainly don't want to become a brake on that progress. That's why we decided to seek a new, ambitious investor who is financially strong and capable of pursuing the next phase of development and new investments," Marrandi noted.

According to Marrandi, Estonia Farmid has actually had a long-standing partnership with Infortar. The two companies jointly operate the Oisu biogas plant, in which Estonia Farmid holds a 40 percent stake, with the remainder owned by Infortar and Alexela. "Because of this, we are already quite familiar with each other's business logic, at least in the area where we have cooperated," he said.

Marrandi added that Infortar has also expressed interest in drawing on the knowledge and resources of the current owners to support the company's development and that they are willing to assist in this effort.

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