Cherkizovo acquired LISKO Broiler
March 26, 2014 - Moscow, Russia
Cherkizovo Group Acquired LISKO Broiler,
one of the country's largest poultry producers
Cherkizovo Group (LSE: CHE), Russia's largest meat and fodder producer,
announces the acquisition of LISKO Broiler, a poultry producer in the
Region in Southern Russia. The acquisition will make Cherkizovo Group the
country's largest poultry producer, with production capacity exceeding half
million tonnes live weight per year*. APK Mikhailovsky LLC, which is a part
the Cherkizovo Group, acted as a buyer. The deal was approved by the
LISKO Broiler is the largest poultry producer in the Voronezh Region
and one of the market leaders in the Central and Southern Federal
Districts. Based on Russian Poultry Union data, LISKO ranks seventh
among top poultry producers with a 2% nationwide market share. Its
production capacity is approximately 95,000 tonnes (live weight) per
LISKO's full-cycle production assets that will be integrated to
Cherkizovo Group include:
- 7 poultry production facilities;
- 4 parent flock sites with a slaughtering facility of 4000 heads
- 2 reproduction flock sites;
- Slaughtering complex with capacity of 9000 heads per hour;
- Hatchery with capacity of 80 million eggs per year;
- Feed mill with 40 tonnes per hour capacity;
- Grain storage facility with overall storage capacity of 100,000
- Meat and bone meal production facility;
- Rendering facility
It is worth mentioning that all LISKO production facilities are
built in accordance with modern standards and are highly efficient."We have
made a major step towards market leadership, which is in
line with our long-term strategy combining organic growth and M&A.
Acquisition of LISKO not only gives us strategic advantages, such as
increasing the scale of our business and access to Southern Russian
markets, including a synergy effect that we will feel even in the first
year of integration. LISKO's facilities are located in Voronezh Region,
where Cherkizovo has a land bank, and this gives us an opportunity to
build a vertical integration chain. Leveraging on Cherkizovo's
distribution capabilities will help to increase market access for
LISKO's products and save on logistics. We have acquired a quality
asset at a price below the replacement value, and I am sure this deal
will be beneficial for both our shareholders and customers", Cherkizovo
CEO Sergei Mikhailov said in commenting on the deal.
Terms of the Deal:
The deal is based on an enterprise value of approximately RUR 5
billion for LISKO Broiler, including debt. Cherkizovo Group will assume
the acquired company's debt; equity will be financed through the
company's own funds. The deal was made at a 4.8 EV/EBITDA ratio,
based on the 2014 earnings forecast*.
Sberbank CIB acted as the financial advisor for Cherkizovo Group.
Due diligence was carried out by Ernst and Young and Hannes Snellman.
Hannes Snellman acted as legal consultants on the deal.
About Cherkizovo Group
Cherkizovo Group (LSE: CHE) is the largest meat manufacturer in Russia
and one of the top three companies serving Russia's poultry, pork, and
meat processing markets. The company is also Russia's largest producer
The Group includes 8 full cycle poultry production facilities, with
atotal capacity of 550,000 tonnes live weight p.a.; 14 modern pork
production facilities with atotal capacity of 180,000 tonnes live
weight p.a.; 6 meat processing plants with atotal capacity of 158,000
tonnes p.a.; 6 fodder plants with atotal capacity of 1.4 million
tonnes p.a.; grain storage facilities with anoverall storage capacity
exceeding 500,000 tonnes; and aland bank exceeding 100,000 hectares.
In 2013, Cherkizovo produced more than half a million tonnes of meat
Due to its vertically integrated structure, which includes agricultural
land, grain storage facilities, feed production, livestock breeding,
growing and slaughtering, as well as meat processing and integrated
distribution, Cherkizovo has consistently delivered sustainable revenue
and profit growth. In 2013, Cherkizovo's consolidated revenue was more
than USD 1.6 billion.
Within the last five years alone, Cherkizovo Group has invested more
than USD 1 billion into the development of Russia's agriculture sector.
Cherkizovo Group's strategy includes organic growth and investment
in new projects, driving the consolidation of the Russian meat market.
Cherkizovo shares are quoted on LSE and RTS/MICEX
*Cherkizovo Group management estimates for 2014
This information is provided by RNS
The company news service from the London Stock Exchange