MHP seeking to acquire Slovenian poultry producer

Ukraine’s leading poultry producer MHP (MHPC LI,
MHPSA) is seeking to acquire Perutnina Ptuj, a poultry meat producer and
processor in Southeast Europe, according to the company’s Sept. 25
announcement. Notices about the planned purchase were also published by the
Slovenian Competition Protection Agency and Federal Competition Authority of
Austria. The major shareholder of Perutnina Ptuj Group is SIJ Group (a
Slovenian holding that specializes in steel production), which acquired the
poultry producer in 2016. The Perutnina Ptuj Group generated EUR 257.1 mln of
revenue and EUR 24.4 mln of EBITDA in 2017. SIJ Group announced in its 2017
annual report its plans to spin off its poultry segment this year.

Andriy Perederey: Our
thoughts about MHP’s aspiration to acquire new assets
have been confirmed. The Slovenian and Austrian authorities will announce their
ruling on the acquisition after Oct. 19, while MHP bondholders face an Oct. 4
deadline on changing covenants to facilitate the deal.

The deal’s value could be in the range of USD
110-130 mln, based on market multiples of Eastern European poultry producers and
processors. Also, we see that such an acquisition could boost MHP’s export
share and EBITDA margin with enhanced ability to sell products with higher
added value. And we doesn’t change our bullish view on MHP stock and neutral
view on its Eurobonds.