Cherkizovo Group has announced its completion of the acquisition of 100 per cent of NAPKO, one of Russia’s leading grain producers.
The transaction includes the acquisition of NAPKO’s agricultural land bank of 147,000 hectares, located in the Lipetsk, Tambov and Penza regions, as well as the supporting production infrastructure to cultivate the land and store grain.
In 2016, NAPKO produced 250,000 tons of grain. The transaction increases Cherkizovo Group’s total operating land bank to 287,000 hectares.
Sergey Mikhailov, CEO of Cherkizovo Group, commented: "The acquisition of NAPKO marks an important step in the development of our grain farming segment, and we are pleased to have completed the transaction in a timely manner.
"NAPKO’s assets are an excellent strategic fit for Cherkizovo Group and will allow us to boost self-sufficiency in grain to 60 per cent over the next few years from 30 per cent at the end of last year.
"We have a number of synergies with NAPKO, which will help us improve efficiency and reduce our production costs in the grain farming segment.
"We do not see any potential risks in integrating the acquired assets as they only complement Cherkizovo’s business model."
Total cost of transaction was RUB 4,872 million. An independent valuation of the transaction, conducted by Ernst & Young, confirms that NAPKO fully corresponds with the average market multiples of similar Russian companies.
Independent members of Cherkizovo Board have approved the proposed acquisition by Cherkizovo Group’s company of 100 per cent participation share in the charter capital of NAPKO from affiliated persons.
As part of the transaction, Cherkizovo assumed NAPKO’s debt, which stood at RUB 751 million as of 31 March 2017. This acquisition will not violate any of Cherkizovo Group’s bank covenants.