Russian meat processor Cherkizovo has indicated that its proposed acquisition of two greenfield pork complexes will increase its production capacity by almost 30%.
Cherkizovo has signed a memorandum of understanding to acquire a controlling interest in two pork farms located in Penza and Lipetsk. Each farm has an “expected” capacity of 12,500 tonnes annually.
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The company said details of the deal would be released once terms had been agreed. However, the group added that the transaction is expected to be in the region of US$100m, with $20m payable in cash and $80m in debt assumption.
Cherkizovo said that it expects the acquisition to provide increased capacity within a “high-margin” business as well as cost and scale synergies.
The transaction is expected to close in the second half of 2010.
“We are delighted to announce this deal, which pioneers the consolidation of Russia’s meat market, and is fully in line with our long-term strategic commitment,” CEO Sergey Mikhailov said.
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By GlobalData“The group’s pork division is already a well established, high margin business and a key contributor to the group’s growth and profitability and this acquisition provides scope for further expansion in the group margin through synergy benefits, while delivering a step-change in volumes.”
