Cherkizovo Acquires Zarechnaya Poultry Facility

Cherkizovo Group has agreed to acquire a 100 per cent controlling interest in the Zarechnaya poultry facility, for a total consideration of US$5.2 million.

Located in the Penza region of Russia, the acquired poultry site assets comprise 41 bird houses, with a combined capacity of 1.55 million broiler hens. The site will be integrated into the existing Penza project, created in late 2009, thereby further increasing capacity at the cluster.

The Group will additionally invest approximately US$18 million in upgrading the Zarechnaya poultry facility. The site is expected to be operational from the fourth quarter of 2011. Once operational, its annual production capacity will be 22,500 liveweight tonnes, thus enhancing the poultry rearing capacities in the Penza cluster, and meeting the slaughter facility's hourly capacity of 14,000 birds.

The Penza region capacity increase project includes:

• the construction of a state-of-the-art slaughtering facility with an hourly capacity of up to 8,000 birds, in addition to the existing facility with an hourly capacity of 6,000 birds
• an incubation facility for 105 million eggs per year
• a feed mill with an annual capacity of over 300,000 tonnes, and
• bird houses at both the existing and new sites of the Vasilievskaya factory.

Sergey Mikhailov, CEO of Cherkizovo Group, commented: "The acquisition of the Zarechnaya poultry facility is fully in line with our strategy to develop our vertically integrated production facilities. Our investment in this project will improve the capacity and efficiency of our operations as we seek to meet the growing demands of the domestic market for high-quality Russian-produced meat products.

"Russia remains a significant importer of meat and Cherkizovo fully supports the government's objective for the country to be self-sufficient in poultry meat production by 2014. Cherkizovo's business development and investment over the next three to five years will make a significant contribution to the import substitution programme.

"We have proven our commitment by continuing our investment to build capacity, even in a difficult economic environment, and we are continuing our efforts to accelerate the implementation of these projects