The acquisition is fully in line with the strategy to increase high-margin production in our portfolio, which is oriented towards the premium price segment of the market. Additionally, the Kaliningrad meat plant is located in a free economic zone, with special customs preferences, therefore enabling effective distribution of value added products in the European part of Russia.
The transaction was agreed on September 15, 2010, for a total consideration equating to US$4.1 million, of which US$2.4 million will be payable in cash. The Group will also assume the acquired entity’s outstanding debt, which at the time of acquisition was US$1.7 million. Cherkizovo additionally intends to invest about US$2.5 million in the restructuring of this meat processing plant.
Sergey Mikhailov, CEO of Cherkizovo Group, said: “We have recently taken measures to restructure our meat processing business and reduce costs. The restructuring results are now emerging, with the segment becoming steadily more profitable this year. This acquisition, ideally located in the Kaliningrad region is fully in line with our strategy to increase efficiency and provide a stable base for our meat processing segment.”