AFK Sistema setting up JV with Louis-Dreyfus
MOSCOW. April 4 (Interfax) - AFK Sistema is setting up RZ Agro Holding Ltd., a joint farming venture in partnership with several members of the Louis-Dreyfus family, Sistema announced on its website.
"Sistema acquired two grains and oilseeds farms in the Rostov Region of Russia, with a total acreage of 46,000 hectares. These farms will be contributed to the joint venture along with the existing agricultural holdings of RZ Agro Ltd. which consist of the management company Russkaya Zemlya LLC and three grains and oilseeds farms in the Rostov Region with a total acreage of 41,500 hectares," Sistema said.
"Upon completion of certain conditions in 2013, Sistema will own 50% in the Joint Venture, with possible adjustments to the valuation of the transaction based on achievement of performance measures," it said.
The JV is being run on a parity basis, representatives of the parties told Interfax.
"Completion of the transaction is subject to the satisfaction of certain conditions, including execution of additional agreements and receipt of approval from the Federal Antimonopoly Service, and is expected to occur in the second quarter of 2012," Sistema said.
The JV strategy involves increasing land assets with organic growth and strategic acquisitions with the aim of creating "a leading agricultural company in Russia," the company said.
"The joint venture will analyze acquisition opportunities in the key production regions of Southern Russia and Central Chernozem [Black Earth region] with a view to creating efficient clusters with access to domestic and export markets. We are optimistic about the opportunities arising out of cooperation with our Partner, who is bringing its industrial farming and managerial expertise to the Joint Venture," company President and CEO Mikhail Shamolin is quoted in the statement as saying.
AFK Sistema owns and manages a portfolio of investments in companies in various sectors. Its most significant assets are in telecommunications (Mobile TeleSystems (MTS) , Sistema Shyam Teleservices Ltd.), the fuel and energy complex (Bashneft ), electronics (RTI-Sitronics), and media (Sistema Mass Media), and it is developing other lines of business that include retail (Detsky Mir ), finances (MICEX), medical services (Medsi), and pharmaceuticals and biotechnology (Binnopharm).
The company's main shareholder is its founder and board of directors chairman Vladimir Yevtushenkov, who holds a 64.2% stock interest. Nineteen percent of the Sistema stock trades on the London Stock Exchange.