Mosselprom buy to have "profound" impact on Cherkizovo

The acquisition of Russian poultry processor Mosselprom will make a "profound" contribution to Cherkizovo's growth, the chief executive of the London-listed meat group said today (16 May). Sergey Mikhailov said the move to buy Mosselprom was "one of the most significant steps" Cherkizovo had taken. The completion of the deal, first announced in March but subject to financial and legal due diligence and regulatory approval, was announced this morning. "This transaction underlines our strategic focus on both the acquisition of large companies, as well as separate production sites," Mikhailov said. "The transaction to acquire Mosselprom is one of the most significant steps that we have taken in the development of our rapidly growing business, and it will make a profound contribution to the group's growth in the years to come, as already in 2011 poultry production is expected to increase by 50% compared to 2010 levels." Cherkizovo had 7% of Russia's poultry sector in 2010, while Mosselprom had a 2% share of the market. Mikhailov added: "Together with existing projects to increase capacity, we will be able to strengthen our leading positions in the poultry market and further increase production capacity in our high-margin pork segment. Moreover, we expect to strengthen our dominant position on the lucrative Moscow market and are adding a powerful brand to our portfolio which we believe will enhance our business in this region." The agreement values Mosselprom at US$252.9m, comprising $183.8m in debt and $69.1m of equity. Cherkizovo will use a share issue to pay for $27m of the equity; the rest will be paid from its own funds.