News 2872 views update:Mar 9, 2016

Thailand’s CPF invests €614m in Russian poultry market

Thai food producer, Charoen Pokphand Foods (CPF), is set to enter the Russian poultry sector through the acquisition of an integrated poultry business from Dutch firm Agro Invest Brinky for €614m ($680m).

The acquisition will be completed in two transactions. CPF will acquire an 80% interest by the end of 2015 and the remaining 20% interest will be acquired by the end of 2018.

Integrated poultry business

For the first transaction, CPF Netherlands will acquire a Russian company which will hold 80% interest in CJSC Poultry Production Severnaya and CJSC Poultry Parent Stock Production Woyskovitsy (S&W). Together they operate an integrated poultry business in Russia and are engaged in the production of feed, breeding of parent stock, hatching, as well as operation of broiler houses and primary processing.

Adirek Sripratak, President and CEO of CPF said that the Board of Directors foresees the acquisition as an opportunity for CPF to expand further into Russia which has significant growth potential for meat consumption. Furthermore, S&W are considered as one of the top five poultry companies in Russia with a market share of about 5% in the domestic poultry industry. The immediate benefit that CPF will gain from the transaction is to have a strong footprint across the St. Petersburg and Moscow regions.

Fragmented poultry market

Adirek added that the integrated production process at S&W also provides an ideal platform for further growth in a relatively fragmented poultry market with no dominant players and potential consumption growth given the large population size of over 140 million in Russia.

"Together with the swine business in Russia, CPF will be able to create a multi-species protein business there and also create the opportunity for CPF to add value to its meat products and look into potential meat export opportunities from Russia to other countries."

Increased global presence

Willeke van den Brink, CEO of Severnaya and Woyskovitsy said: "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 realise its full potential and enter its next growth stage by being part of a large multi-national player with a long term vision. 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."

The completion of the transaction is subject to antitrust approval in Russia and other conditions precedent.

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