CPF said the acquisition, which will be completed through its subsidiary CPF Netherlands, will involve the purchase of a 100% stake in CJSC Poultry Production Severnaya (Severnaya) and CJSC Poultry Parent Stock Production Woyskovitsy (Woyskovitsy) - which already run as an integrated poultry business in Russia.
CPF chief executive officer Adirek Sripratak said the buy-out is in line with its strategy to focus on core businesses and further diversify its geographical presence, adding that the acquisition of the Russian food business will add value to both its swine business and poultry.
"We believe the acquisition will pave the way for CPF to expand further in Russia, which has significant growth potential for meat consumption,” he commented.
The acquisition also follows CPF's purchase of a Russian pork business in 2013 and could also allow the firm to create a multi-species protein business.
Two part deal
The €614 million deal will be completed in two transactions. In the first transaction, CPF Netherlands will acquire all of the shares of a new Russian company, which is to be set up by Agro Invest by August 31 this year. Before completion of this first acquisition, the newly formed Russian company will itself acquire 80% of the shares of Woyskovitsy and Severnaya.
The first acquisition is expected to occur before the end of this year, with revenue from the deal for the integrated poultry business set to be reported from Q4, said Adirek, who also commented that the deal is expected to break even within five years.
A second transaction will see CPF Netherlands then acquire the remaining 20% of Woyskovitsy and Severnaya in 2018.
Last year Woyskovitsy and Severnaya together generated consolidated revenues of around €265m (Bt10.22 billion) and a net income of more than €77m (Bt3 billion). The combined business is one of the top five poultry producers in Russia, with a market share of around 5%.
"After a highly successful two decades in the Russian poultry market and growing a small family enterprise to one of the leading players in the industry in Russia, we feel that the company can realize its full potential and enter its next growth stage by being part of a large multi-national player with a long term vision,” said Severnaya and Woyskovitsy CEO Willeke van den Brink.
"We are convinced that CPF, with its global presence and strong focus on growth is the perfect partner for this endeavour and look forward to growing the business together with them."