19 Apr 2022 11:46

Rusagro might buy Russian business of Finland's Valio - paper

MOSCOW. April 19 (Interfax) - Rusagro Group is interested in buying the Russian business of Finnish dairy products company Valio, which has announced it is leaving the country, national daily Kommersant reported on Tuesday, citing sources.

In addition to a plant in Moscow Region with annual capacity of 15,000 tonnes, the deal could include the rights to the Viola cheese brand, but without association with Valio, one of the sources said. Rusagro and Valio did not comment.

Streda Consulting CEO Alexei Gruzdev said that buying Valio's business with the rights to use the Viola brand is consistent with Rusagro's strategy of expanding its b2c brands. The group will thus gain access to a distribution system and access to the retail market in the segment of processed cheese, for the production of which it supplies raw materials from its other divisions, he said.

Gazprombank senior analyst Marat Ibragimov said that buying Valio's business in Russia would also be a good way to use the $137.22 million that Rusagro had wanted to pay out in dividends to shareholders before dropping these plans.

Valio announced at the beginning of March that it would exit the Russian market due to Russia's military operation in Ukraine. The company has a plant in the Moscow Region town of Yershovo with capacity to produce 15,000 tonnes of products per year. The plant specializes in producing processed cheese under the Oltermanni and Viola brands, as well as cutting and packaging yellow cheese. Other Valio products are made at third party facilities under contract.

Valio's Russian division closed 2021 with net profit up 29.25% to 320.47 million rubles on revenue up 8.78% to 8.14 billion rubles. The company's Russian office said in March that operations were continuing and that Valio was supporting production and logistics.

Rusagro, one of Russia's largest producers of sugar, meat and oil and fat products, also makes dry mixes for the food industry, and cheese and butter under the Milye, Syrnaya Kultura and Maslava brands.

Rusagro principal owner Vadim Moshkovich was hit by European Union sanctions in March, after which his Cyprus-based firm Granada Capital CY Ltd reduced its stake in Rusagro to 49% by transferring 7.22% to Yury Zhuravlev. Moshkovich also stepped down from the group's board of directors.

The head of sanctions law and compliance at Pen & Paper, Sergei Glandin said that if Valio makes sure that the buyer is not owned or controlled by Moshkovich, it is highly likely that the deal can take place.