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Cherkizovo Closes Aquisition of Russian Grain Producer NAPKO.

M2 EQUITYBITES-May 1, 2017-Cherkizovo Closes Aquisition of Russian Grain Producer NAPKO

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1 May 2017 - Russian meat and feed producer Cherkizovo Group (LSE: CHE) (MOEX: GCHE) has completed the acquisition of 100% of Russian grain producer NAPKO, the company said.

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.

Total cost of transaction was RUB 4.872bn (USD 85.55m).

An independent valuation of the transaction, conducted by Ernst and 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% 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 751m as of 31 March 2017. This acquisition will not violate any of Cherkizovo Group's bank covenants.

Cherkizovo Group is the largest meat and feed producer in Russia. The group is a top-3 producer in the poultry, pork and processed meat markets and is the largest feed manufacturer in the country.

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