Russian meat processor Cherkizovo Group has acquired OAO Chicken Kingdom, the fourth-largest poultry producer in Russia, in a deal worth US$143m.

Cherkizovo's acquisition of the holding company that controls Chicken Kingdom follows the initial signing of a Memorandum of Understanding in April. 

Cherkizovo, which is listed on the London Stock Exchange, was already one of the largest poultry producers in Russia, and the largest in the Moscow area. The company said the acquisition "will bring additional scale, strong brands and increased market share, provide synergistic benefits, and position Cherkizovo as the clear number one poultry producer in Russia".

Chicken Kingdom produces chilled and frozen poultry products under the Chicken Kingdom brand. Annual volumes last year were around 70,000 tons of dressed weight, and this year volumes are forecast to rise to 80,000 tons. Chicken Kingdom reported sales revenues of US$109m in 2006 and EBITDA of $23m.

The acquisition has been funded primarily out of proceeds from Cherkizovo's initial public offering, with some additional debt financing. The purchase price of $143m covers the acquisition of 100% of the share capital, certain trademarks of Chicken Kingdom and the retirement of certain liabilities.

"This is a key step for the business and will, in addition to driving strong organic growth, transform our poultry division by doubling our production capacity," said Cherkizovo CEO Sergey Mikhailov.

"Today's acquisition has also enabled us to enter new and dynamic regions that present us with excellent opportunities for further growth and strengthen our offering in the central region of the European part of Russia."