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OJSC Cherkizovo Group one of Russia's leading integrated and diversified meat producers, today announces approval by the Board of Directors of the acquisition of two greenfield pork farms located in the Penza and Lipetsk regions of Central Russia.At the meeting of the Board of Directors held on 3rd June 2010, the acquisition of two new greenfield pork complexes in the Penza and Lipetsk regions was approved. Members of the Board reviewed a report by an independent appraiser, which conducted an appraisal of the market cost of non-current assets and market cost of business. Also, members of the Board reviewed the results of an independently performed due diligence work.
The Board approval follows the Memorandum of Understanding (MoU) to acquire the controlling interest in the two pork production farms, which was signed in March 2010. The total consideration for the transaction is expected to be in the region of US$100 million, of which approximately US$20 million will be payable in cash. The Group will assume the acquired entities' outstanding debt at the time of acquisition, which is expected to be approximately US$80 million. The acquisitions will incur no further capital expenditure
The complexes are expected to reach their full combined capacity of 25,000 live-weight tonnes in 2012, resulting in an increase in Cherkizovo Group's pork production capacity of almost 30% from the Group's current overall pork production capacity.
Sergey Mikhailov, CEO of Cherkizovo Group, said:
"We are pleased that the independent members of the Board of Directors approved the transaction. We anticipate finalising the acquisition in the second half of 2010. This deal will be a milestone in the consolidation of Russia's meat market and an exciting development in the company's stated strategy to deliver shareholder value."
Members to the Board of Directors:
* Igor Erzolovich Babaev
* Sergey Igorevich Mikhaylov
* Evgeny Igorevich Mikhaylov
* Yury Nikolaevich Dyachuk
* Musheg Lorisovich Mamikonyan - independent member of the Board
* Samuel B. Lipman - independent member of the Board
* Marcus Rhodes - independent member of the Board
