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Eastern Europe
April 5, 2019 www.intellinews.com I Page 21
Russian meat major Cherkizovo ramps up acquisitions
One of Russia's largest meat producers Cherkizo- vo Group plans to acquire a large competitor poul- try producer Prioskolye, Reuters reported on April 2 citing unnamed industry sources.
In March shares of Cherkizovo Group jumped 50% on the Moscow Exchange hitting all-time high of RUB2,250 amid the anticipated acquisition of one of Russia's largest poultry producers Eurodon (aka Evrodon).
Already in November 2018 bne IntelliNews suggested that Cherkizovo would be the most likely buyer for troubled Eurodon, as the company has been consol- idating poultry assets through acquisitions ahead of the upcoming opening of the vast Chinese market to Russian frozen poultry supplies.
As for Prioskolye, bne IntelliNews reported the acqui- sition of its assets in the Altai region by Cherkizovo. Now the company of Igor Babayev reportedly aims to acquire Prioskolye's main assets in the Belgorod. Other acquisition by Cherkizovo include the troubled poultry maker Belaya Ptica (White Bird).
Should Cherkizovo indeed acquire more Prioskolye it would "become untouchable and become not only the largest [poultry producer] in the country, but one of the largest in the world," sources told Reuters.
In March Cherkizovo also said it will seek to raise up to $200mn through a secondary public offering (SPO) on the Moscow Exchange. The company will use its treasury shares and allow shareholders to sell.
The funds raised in the SPO will be used for gen- eral corporate purposes, cutting leverage, as well as an additional share issue planned for after the offering. Details on the SPO have not yet been re- leased. Cherkizovo said the freefloat will be aimed at 25% and that the Babayev family will retain control over the company.
At the end of 2017 Cherkizovo was valued at circa $2bn with 82.1% of the company’s stock controlled by the family of its founder Igor Babayev, after it bought a 21.05% stake for RUB12bn ($200mn) from the second-largest shareholder, leading Russian fund Prosperity Capital Management.
In August 2018 the owners of Cherkizovo moved the Cyprus-registered assets from their offshore domicile to Russia.
KDL and the march of Russia's medical lab services business
Russia has many flourishing sectors like oil and agriculture, but the rise of the middle class has given rise to increasingly sophisticated services.
bne IntelliNews editor-in-chief Ben Aris talked to KDL’s CEO Yuri Leonov, who runs one of Russia’s largest privately owned medical laboratory service companies. While the state is obliged to provide free health care to everyone, Russians are willing to pay for better service and more sophisticated results.
The EBRD and UFG Asset Mangers invested in the company in 2012 and now it is a top two player with $75mn turnover, and growing at over 30%
a year. But the sector is in no way consolidated as the race is on to capture market
share before the inevitable M&A and IPOs start.
Yuri Leonov,
CEO KDL
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