Shares in Kernel Holding tumbled 9% after the Ukraine agriculture group said it was issuing some $125m in new stock to bankroll acquisitions - revealing that last week's Ukrros deal was only the start of a spate of takeovers.

The silos-to-sunflower oil company said it was to sell 5m new shares to institutional investors to finance growth, "including potential acquisitions".

The cash raise comes a week after Kernel revealed that it had taken an option to pay $42m for a 71% stake in Ukrros, and grain grower and sugar producer, which also has roughly $100m in debt.

Fitch Ratings analysts cautioned that this deal left Kernel with "little headroom", with its existing balance sheet, for further acquisitions without risking a downgrade to its credit rating.

However, Kernel, with its cash raise, revealed plans for a string of further acquisitions, to exploit what it saw as Ukraine's potential for exploiting a "well supported" agricultural commodities cycle.

Shopping list

In Ukraine, Kernel said it was in talks to buy, for about $170m, farm operators managing a total of 150,000 hectares of "prime" farmland, and with earnings before interest, tax, depreciation and amortisation of $40m.

The group also "expects" to buy grain terminal capacity with access to deep water docks for $120m-130m, and pay some $60m for an extra 300,000 tonnes sunflower crushing capacity, a move which would "largely complete" domestic expansion in this sector.

Kernel has already bought Ukraine sunflower crusher Allseeds in a $220m deal.

In neighbouring Russia, the group has identified "several" oilseed crushers as potential purchases, although it lost out to a Russian rival in an auction for one target.

'Slight drag' 

The group's Warsaw-listed shares tumbled to a 2011-low of 68.00 zloty in early deals before recovering some ground to stand at 70.90 zloty in lunchtime trading, down 5.5% on the day.

At this price, the group's new shares would be worth some 355m zloty, or $125m.

Kernel's statement added that its Ukrros acquisition would hand it an extra 93,000 hectares of farmland, 87,000 tonnes of grain storage and 220,000 tonnes of sugar beet processing capacity.

It forecast "significant synergies" between its own operations and those of Ukrros, which are in the main situated reasonably nearby in central Ukraine, while the sugar operations offered "upside and potential for future business development".

Fitch cautioned that Ukrros's sugar beet yields were below those of competitors such as Mriya, adding that the "subdued profitability of the sugar processing segment will slightly drag on [Kernel's] financial performance in the near term".

Agrimoney