Thailand’s CP Foods to acquire Russian poultry business for $680m

Visual from CPF website

Thailand’s largest meat and animal feed producer, Charoen Pokphand Foods PCL (CPF),Friday said it would buy Russian poultry business from Dutch firm Agro-Invest Brinky B.V. for $680 million in cash.

The deal is routed through the Thai company’s subsidiary, which is buying two firms in Russia – CJSC Poultry Production Severnaya (S) and CJSC Poultry Parent Stock Production Woyskovitsy (W) – which are currently owned by Agro-Invest Brinky BV.

The company’s chief executive officer Adirek Sripratak said that this was a good opportunity to expand its business in Russia because demand for meat and poultry has increased every year.

“Russia has high growth potential. This is a good opportunity as the country is short of meat supply and has to import pork and chicken to serve domestic demand,” Sripratak told reporters in Bangkok.

“S and W are among top five leading poultry meat producers in Russia where there is about 140 million population. The poultry business there is a fragmented market, not monopolised by any firms. I believe that our know-how technology will bolster their business and add more value to products,” he added.

In 2014, S and W made total sale revenue of 16.935 billion Russian Ruble ($291 million) and total net profit of 5.097 billion Russian Ruble ($87.61 million).

CPF plans to buy 80 per cent stake in each company this year and the remaining 20 per cent within 2018.

Upon the completion of the acquisition, it will recognise the revenue in the fourth quarter of this year and expects to reach the break even within five years.

Sripratak further told reporters that the group was negotiating to acquire two more food processors in Russia.

“Through the future acquisition, we plan to generate 75 per cent of total revenue from our businesses in the overseas markets in  the next five year, up from 65 per cent at present,” the chief executive told reporters.

This year, CPF targets to boost its revenue by 10 per cent and has allocated a budget of 20 billion baht for expanding its business domestically and internationally, focusing on China, India, Philippines and Vietnam. So far, it has already invested in 14 countries in total.

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