Nutritek Group ("Nutritek" or the "Group") (RTS, MICEX: NTRI), Russia’s largest baby food manufacturer, today announced agreement to sell its dairy and agro business in Russia to Russagroprom company for about $350 mln.

The deal comprises two parts. The first one is an immediate sale of all Group’s dairy plants and agro-holdings in Vologda region priced at US$250 mln of enterprise value and payable in cash.

The list of entities to be sold contains six plants and one agro-holding:

• Severnoe Moloko (Vologda region)
• Penzenskiy dairy plant (Penza)
• Zelenodolskiy dairy plant (Tatarstan)
• Moloko (Belgorod region)
• Filimonovskiy MKK (Krasnoyarsk region)
• Biyskiy dairy and cheese plant (Altay region)
• Nutritek-Agro-Vologda (Vologda region)

The second part of the deal is the option to buy back about 30% stake in sold assets at the price of the sale in 5-year prospective. The Nutritek Group evaluates the present value of this option at about US$100 mln.

Commenting on the deal, Gennadiy Popov, Chief Executive Officer of Nutritek Group, said: “I’m glad to announce the agreement that will strengthen Nutritek’s financial positions. The upcoming cash will be used for developing the high technology and high margin baby food production, for the projects in South-East Asia and for repayment of debts. This deal will further strengthening positions of Nutritek as a market leading producer of baby and special foods in CIS and Baltic countries. The dispose of dairy and agro business is part of a strategy to build a global baby food company”.

Commenting on the deal, Vladimir Alginin, President of Russagroprom, said: “The only way to meet the challenge of prices growth limitation is a vertical integration of the dairy processing chain from a very beginning of a herd quality management to a cattle feeding to a milk processing. Integrated corporation shall produce the major part of raw milk internally and thus shall be focused on agro business primarily”