EINBECK (dpa-AFX) - The seed producer KWS Saat is selling its weakening corn business including licenses in South America. The sale price is in the mid three-digit million euro range, the company announced late Monday evening in Einbeck. The buyer is the Argentinian family-owned company GDM. The proceeds are to be used to reduce debt. Investors were delighted with the plans: KWS shares rose sharply on Tuesday.

With an increase of a good 9 percent to over 51 euros, the SDax share managed to jump out of the trough of around 47 euros reached in recent weeks. The share had fallen to this level in February when the company presented its figures for the first half of the financial year.

KWS had slipped deeper into the red after six months - also due to the weak corn business. At that time, the KWS Executive Board had also dampened its expectations for the segment: Instead of a slight increase in net sales, KWS now expected a slight decline in corn.

The current sale of the corn business will have a clearly positive effect on key financial figures, the press release continued. The majority of the proceeds from the sale will be used to repay loans. According to KWS, a significant improvement in the debt ratios and a considerable reduction in interest expenses can therefore be expected in the future.

The divested business activities reportedly generated net sales of around EUR320 million in fiscal year 2022/2023 (as of the end of June) with an average margin in terms of operating earnings before interest and taxes of around ten percent.

Upon completion of the transaction, KWS will significantly reduce its activities in South America. All business activities in the areas of vegetables and sugarbeet as well as the breeding programs for the European corn and sugarbeet portfolio in Brazil, Chile and Peru will remain part of the Group, the statement added. With regard to the North American corn business, KWS is examining various strategic options.

The transaction is subject to customary regulatory approvals and closing conditions. The company expects the transaction to close in the course of the second quarter of 2024./he/lew/nas/mis