Thailand's Charoen Pokphand Foods (CPF) has entered into a deal to acquire the integrated Russian poultry business of Agro Invest Brinky.
The acquisition will be completed in two phases: CPF will acquire an 80% interest by the end of the year and the remaining 20% interest will be acquired by the end of 2018, the company revealed on Friday (24 July).
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By GlobalDataCPF will take control of a Russian company that will hold 80% interest in CJSC Poultry Production Severnaya and CJSC Poultry Parent Stock Production Woyskovitsy, the company said.
The two entities operate an integrated poultry business in Russia and are engaged in the production of feed, breeding of parent stock, hatching, as well as operation of broiler houses and primary processing. In 2014, the assets generated consolidated sales of RUB16.9bn and net income of RUB5.1bn. They command a market share in Russia of around 5% of the poultry industry.
Adirek Sripratak, president and CEO of CPF, said the acquisition is an opportunity for the Thai group to expand further into Russia. He said the market has "significant growth potential" for meat consumption.
In a statement, CPF noted: "The immediate benefit that CPF will gain from the transaction is to have a strong footprint across the St. Petersburg and Moscow regions.
"The excellent management, strong operational presence and consistent financial performance of [the assets] would offer an ideal platform for CPF to become one of the leading poultry players in Russia. The investment is in line with CPF’s strategic objectives to focus on its core businesses and further diversify its geographical presence internationally."
Together with its swine business in Russia, CPF said it wants to create a multi-species protein business in the market, leveraging the opportunity for CPF to add value to its meat products and look into potential meat export opportunities from Russia to other countries.
Willeke van den Brink, CEO of the Russian assets, known as S&W, said: "After a highly successful two decades in the Russian poultry market and growing a small family enterprise to one of the leading players in the industry in Russia, we feel that the company can realize its full potential and enter its next growth stage by being part of a large multi-national player with a long term vision. We are convinced that CPF, with its global presence and strong focus on growth is the perfect partner for this endeavour and look forward to growing the business together with them."
The completion of the transaction is subject to antitrust approval in Russia and other conditions.
Reports are also in circulation that CP Foods is considering acquisitions of food processing businesses in Russia, with two deals under negotiation.
The company planned to spend about THB20bn ($573.23m) this year, mainly to finance expansion of its overseas units, Chief Executive Adirek Sripratak told reporters according to Reuters.
CP Foods did not respond to requests for comment when approached by just-food.
