Cherkizovo, the Russia-based meat processor, has snapped up local grain supplier NAPCO.
The company will pay RUB5bn (US$87.9m) for NAPCO’s equity and take on the firm’s debt, which stood at RUB751m at the end of March.
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NAPCO has been one of Cherkizovo’s grain suppliers. The meat group said around 10% of the grain it buys each year comes from NAPCO.
Sergey Mikhailov, Cherkizovo’s CEO said the acquisition of NAPCO was part of its strategy to use M&A to make the business more vertically integrated.
“While organic growth remains our priority, this acquisition represents an excellent example of the strategic M&A opportunities we are ready to explore to further strengthen our vertical integration, supply chain and business model generally. By extending our land bank we will increase our self-sufficiency in grain and focus on synergies and efficiencies to reduce our unit production costs. Following this acquisition, we expect to increase our self-sufficiency in grain to 60% in the next few years from 30% at the end of 2016.”
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