OREANDA-NEWS. September 28, 2010. OJSC Cherkizovo Group (LSE: CHE), one of Russia's leading integrated and diversified meat producers, is pleased to announce the acquisition of a meat processing plant located in the Kaliningrad region, reported the press-centre of Cherkizovo Group.

Cherkizovo Group has signed a contract to acquire the controlling interest in a meat processing plant, located in the Kaliningrad region. Once acquired, the plant’s production will focus on delicacy products, including smoked products, hams and cooked sausages.

The acquisition is fully in line with the strategy to increase high-margin production in our portfolio, which is oriented towards the premium price segment of the market. Additionally, the Kaliningrad meat plant is located in a free economic zone, with special customs preferences, therefore enabling effective distribution of value added products in the European part of Russia. 

The transaction was agreed on September 15, 2010, for a total consideration equating to USD4.1 million, of which USD 2.4 million will be payable in cash. The Group will also assume the acquired entity’s outstanding debt, which at the time of acquisition was USD 1.7 million. Cherkizovo additionally intends to invest about USD 2.5 million in the restructuring of this meat processing plant. 

Sergey Mikhailov, CEO of Cherkizovo Group, said: “We have recently taken measures to restructure our meat processing business and reduce costs. The restructuring results are now emerging, with the segment  becoming steadily more profitable this year. This acquisition, ideally located in the Kaliningrad region is fully in line with our strategy to increase efficiency and provide a stable base for our meat processing segment.”