Finnish meat and poultry company Atria has agreed to sell its Russian subsidiary, OOO Pit-Product, to Cherkizovo Group, the largest meat and poultry producer in Russia, for an estimated price of EUR35 million (US$42.1 million).
The two companies on February 15 announced the planned transaction, which is expected to close during the first half of 2021.
Atria has owned OOO Pit-Product since 2005. At the end of 2020, the company had approximately 700 employees. OOO Pit-Product produces food products – including sausages, hot dogs and deli meats -- for the retail and foodservice channels and owns plants in Gorelovo and Sinyavino, both in the Leningrad region.
“Increase of value-added products manufacturing remains of the most important priorities in Cherkizovo Group`s development. For that reason, acquisition of Pit-Product, one of the most technologically advanced processing facilities in the North-West Federal District, will significantly reinforce our positions in such an important and big market. The transaction will also contribute to further increase of sales in the food service channel,” Cherkizovo CEO Sergey Mikhailov said in a press release.
The transaction does not include Atria Russia's subsidiary Sibylla Rus LLC, which conducts fast food business in Russia.
According to a press release from Atria, at that time when it acquired OOO Pit-Product, the exchange rate of the Russian ruble against the Euro was about 34 and at the end of 2020 about 92. Upon divestment of a foreign subsidiary, the accumulated translation differences related to that subsidiary, presented already earlier in equity, are recognized in profit or loss. As the accumulated translation differences already reduce the group's equity, this entry will not have an effect on the group's equity nor cash flow. Translation differences are not recognized until the final completion of the transaction.
According to the WATT Poultry International Top Companies rankings, Russia is the seventh largest poultry producer in Europe, while Atria is the 43rd largest.
