Cherkizovo Group will buy two hog lots from its owners to consolidate its position on the segment and boost its breeding capacity, the company said in a statement Wednesday.
The company will buy two piggeries in Penza and Lipetsk regions from a company owned by Cherkizovo's main shareholders, Igor Babayev and his family.
Each lot will house 4,800 breeding sows and will have a maximum capacity of 25,000 metric tons of annual meat production by 2012, the group said.
Both piggeries were built recently, with construction on the Penza facility finishing in 2008 and the Lipetsk facility coming on line in 2009.
The new facilities will produce a total of 12,000 metric tons of pork in 2010, increasing to 20,000 and 25,000 metric tons in 2011 and 2012, respectively.
The company would not disclose the final cost of the deal but said it could cost an estimated $100 million, including a $20 million cash payment and an assumption of $80 million of the facilities' debt to Sberbank and Rosselkhozbank.
Cherkizovo Group, which currently operates five hog lots in the Moscow, Vologda, Lipetsk and Tambov regions, expects to boost its pig breeding capacities by 30 percent after the two new facilities are fully operational, CEO Sergei Mikhailov said.
"It is assumed that as soon as the acquired farms are fully operational, overall pork production will exceed 100,000 metric tons," he said.
Igor Babayev and his family members own 70 percent of the company's stock, while the remaining 30 percent is freely floated.