The deal is worth about $100 million, including $20 million in cash and $80 million in debt assumption.
The facility will not require additional capital investment in the future, Cherkizovo predicts. "The transaction's completion is slated for the second half of 2010. The acquisition of hog complexes starts the consolidation of the Russian meat market and is entirely in line with the group's long-term strategy and an important milestone in its development," the statement said quoting the group's general director, Sergei Mikhailov.
A memorandum for acquiring controlling in two hog complexes was signed at the start of March 2010. Both facilities will be developed from scratch: the Penza complex was launched in 2010 while the Lipetsk facility started at the beginning of 2010. The facilities have modules for 4,800 breeding sow each. Production at both complexes will come to around 12,000 tonnes in live weight in 2010, increasing to 20,000 tonnes in 2011.
The complex should reach full capacity in 2012 with total production at 25,000 tonnes in live weight (12,500 tonnes each). This will increase the company's total production capacity for pork by 30% to over 100,000 tonnes.
Cherkizovo Group, which was formed in 2005, includes eight meat- processing companies in the Moscow region, Penza, Ulyanovsk, Belgorod and Rostov regions and Krasnodar territory, four hog complexes, two poultry farms and a feed plant. The company raised $251 million with an IPO in London in May 2006.