Russian dairy and baby food group Nutritek is selling its local dairy and agri-food business to agricultural products company Russagroprom in a deal worth up to US$350m.
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Nutritek said the deal comprised two parts, the first being the immediate sale of the group’s six dairy plants and agro-holdings in the Vologda region for $250m in cash.
Nutritek has an option to buy back about a 30% stake in the divested assets at the selling price within five years. Nutritek said it valued this option at about $100m.
Gennadiy Popov, Nutritek Group’s CEO, said the disposals formed part of the company’s strategy to build a global baby food business. “I’m glad to announce the agreement that will strengthen Nutritek’s financial positions,” Popov said. “The upcoming cash will be used for developing the high technology and high-margin baby food production, for the projects in Southeast Asia and for repayment of debts. This deal will further strengthening positions of Nutritek as a market leading producer of baby and special foods in CIS and Baltic countries.”
Vladimir Alginin, president of Russagroprom, said that vertical integration of the dairy processing chain, from herd quality management, to cattle feeding to milk processing, was “the only way to meet the challenge of prices growth”. Alginin added that the new integrated corporation will be able to produce the majority of its raw milk requirements internally.
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By GlobalDataNutritek Group, which owns 14 companies, producing baby food, dairy products and agricultural products in Russia, Ukraine and Estonia, recorded consolidated revenues of $378.9m in the fiscal year to the end of March .
Russagroprom is a Russian-based agricultural products company, and is currently in the middle of a $550m five-year investment programme to develop its agricultural business.
