Russia’s largest meat producer, Cherkizovo Group, has reached an agreement to acquire the country's third-biggest turkey producer, Krasnobor, for 1.9 billion rubles (US$26 million).
Cherkizovo is acquiring Russia's third-largest turkey producer, Krasnobor. Photo: Marcel van Hoorn
This deal will strengthen Cherkizovo's position on the Russian turkey market and provide synergy with the meat processing capacities the company will establish in the Tula region, Cherkizovo said in a statement.
Demand for turkey “constantly growing”
"The purchase of Krasnobor is in line with our strategy of increasing turkey production, the demand for which [on the Russian market] is constantly growing. We plan to increase our share in this promising market both organically, and through M&A. It is also important that we will be engaged in turkey production in the Tula region, which stars playing an important role in the Cherkizovo's business," Sergey Mikhailov, CEO of Cherkizovo Group said.
Damate is currently Russia’s biggest turkey producer with an output of 151,000 tonnes (in 2020). In 2020, Krasnobor produced 22,100 tonnes of turkey meat, 5% up compared to 2019.
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Takeover of Tambov Turkey
In addition, Cherkizovo rolled out plans to acquire 50% in Tambov Turkey from the Spanish Grupo Fuertes. Tambov Turkey is currently ranked Russia’s second-largest turkey producer. The deal will be paid for with additional shares of Cherkizovo Group. As a result, Grupo Fuertes will increase its stake in the company, Cherkizovo said.
Currently, Grupo Fuertes holds an 8.58% stake in Cherkizovo. Prior to the consolidation, both companies had a 50% share in Tambov Turkey.
The consolidation of 100% of Tambov Turkey will help Cherkizovo Group simplify asset management and strengthen its position in the turkey market, the company said in a separate statement. In 2021, the second stage of Tambov Turkey was launched, which is expected to push its production capacity to 85,000 tonnes per year, starting from 2022.
Strong market prospects
In 2020, Russian turkey meat production climbed by 20.7% compared to the previous year to almost 330,000 tonnes, research conducted by the Moscow-based consulting firm, Agrifood Strategies, showed. Meanwhile, the total revenue of commercial turkey growers exceeded a record-breaking Rub50 billion (US$800 million).
Agrifood Strategies forecast domestic turkey production in Russia to maintain stady grow achieving 400,000 tonnes in 2021, 550,000 tonnes in 2025, and 600,000 tonnes in 2030. This would make Russia the world's second-largest turkey producer, overtaking Poland and Germany.