Cherkizovo finalises takeover of major grain producer

Cherkizovo has taken over Russia’s leading grain producers Napko

Russia’s Cherkizovo has acquired one of Russia’s leading grain producers Napko, in a deal that appears to be the largest single merger in the country’s agriculture sector over the past few years. 

The takeover, finalised on 28 April, is designed to improve Cherkizovo’s self-sufficiency in grain and develop it from its current level of 30% to 60% within the next few years, said Sergey Mikhailov, CEO of Cherkizovo, in a press release published on the company’s website. Mikhailov also noted that the company expected to see some synergy between new and existing assets, as well as improved profitability in the grain segment as a result of the deal.

According to the press release, Cherkizovo paid nearly RUB4.9 billion (US$85.1m) for Napko and took on an obligation to repay the latter’s debt, which amounted to RUB751m (US$13.1m) as of 31 March 2017.

Cherkizovo has estimated that the acquisition should more than double the holding’s land bank bringing it to 287,000 hectares (ha) in total, as Napko currently owns 147,000 ha of agricultural land in the Lipetsk, Tambov and Penza Oblasts of Russia. Cherkizovo also purchased all the accompanying infrastructure for the cultivation and storage of grain, the press release said.

Focus on raw materials

According to official information, last year, in order to produce 903,000 tonnes (t) of meat, Cherkizovo, manufactured 1.6 million t of feed, increasing this figure by 6.5% compared to 2015 and becoming the leader in terms of feed output among all of Russia’s agricultural holdings.

Also last year, Cherkizovo harvested 465,000t of grain, meeting just 24% of its grain needs, the company said in a press release earlier this year.

Cherkizovo is constantly striving for a better rate of self-sufficiency in raw materials for feed, as last year it increased grain output by 40% and, in 2017, it plans to boost this by a further 20% to 562,000t, the company revealed recently.

To achieve this, the company is increasing corn production volumes, which should be boosted by 30% this year compared to 2016, it said, although it declined to reveal specific figures.

Cherkizovo has experienced a sharp fall in net profit for two years in a row; in 2015 this collapsed by 60% year-on-year to RUB 6bn (US$104m), while in 2016 it reduced more than threefold to RUB 1.9bn (US$33m). The low level of self-sufficiency in raw materials for feed during this period was considered one of the company’s key challenges.

Cherkizovo spokeswoman Elena Trifonova told GlobalMeatNews the company was not providing any further information in regard to the Napko takeover, apart from what had already been revealed in the press releases.

Miratorg and RusAgro also buy land

Meanwhile, the focus on self-sufficiency in raw materials for feed is now common for Russia’s meat industry. In particular, another Russian agricultural holding Miratorg has recently unveiled plans to purchase 32,000 ha of agricultural land in Kaluga Oblast to help meet the company’s needs in terms of quality feed.

Also, for several years, RusAgro was purchasing agricultural land in Russia’s far eastern region, in particular Primorsk Krai, with its land bank amounting to 83,500 ha as of the end of 2016. The company needs land to cultivate grain for several pig farms it is currently building in the region.

Related News

Cherkizovo claims to be developing a 'healthy portfolio" of turkey products

Russian meat giant to create up to 200 new jobs

Russia's Cherkizovo wants to increase its exports fourfold by ramping up production

Russia’s Cherkizovo, Miratorg reveal meat export plans

Whole Foods Market has over 460 stories across the US, Canada and the UK

Amazon's Whole Foods deal highlights appeal of physical stores

Octofrost CEO Rasmus Larsoon said the deal puts the business closer to its customers

OctoFrost Group buys Dutch Innotec Systems

Cherkizovo claims to be one of the largest multi-species meat processors in Russia

Spanish business buys $27m stake in Russia's Cherkizovo

Igor Babayev is Cherkizovo Group's majority shareholder

Cherkizovo Group chairman consolidates company stake

RusAgro wants to build a number of pig farms in China - the world's biggest pork consumer

RusAgro pushes into China by building pig farms

Miratorg's new logo is reflective of its industry-leading market position, the company said

Russia's Miratorg reveals new logo

Russia's Cherkizovo said its automated meat plant will employ significantly less staff

Cherkizovo plans fully robotised sausage plant in Moscow Oblast

Russian meat producers sent its first batch of poultry exports to Angola

Cherkizovo enters into Angolan poultry market

The group has six full-cycle pork complexes in the region

Cherkizovo to take on pork complex

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.