Rusagro Unveils Plan to buy Valio

Rusagro Unveils Plan to buy Valio


The Rusagro agricultural holding company intends to buy out the Finnish company Valio, which in connection with the Russian special military operation in Ukraine announced its withdrawal from the Russian market in early March.

Valio runs a plant with an annual capacity of 15,000 tons of products. The company, which is located in the village of Ershovo in Odintsovsky urban district of Moscow region, produces the Viola and Oltermani processed cheese, as well as slices and packs the so-called yellow cheeses.

So, the domestic agricultural company Rusagro plans to buy this Russian business of the Finnish dairy producer. According to the terms of the forthcoming deal, this holding will now include the rights to use the Viola brand in addition to the production site itself although, without any connection with Valio.

Vadim Moshkovich, a former senator from the Belgorod Region who has recently fallen under the sanctions announced by the European Union is the main owner of the Rusagro group of companies. After that, the Cyprus-based Granada Capital CY Ltd, controlled by him, reduced his stake to 49%, transferring 7.22% to businessman Yuri Zhuravlev. Moshkovich even stepped down from Rusagro's board of directors. So, if Valio’s managers feel absolutely certain that the buyer is not under the control of the former main owner, the deal is likely to be sealed.

In 2021, the revenue of the Russian division of this Finnish company grew by 8.7%, and profits increased by 29.25%. Back in March of this year, production and operational activities were maintained, and logistics continued to work almost without any disruption.

As for Rusagro, in fact, it is the largest domestic producer of oil and fats, meat, and sugar. In addition, the company produces dry mixes for the food industry, butter and cheese brands such as Cheese Culture, Maslava and Milier.

As Streda Consultinq’s CEO Alexei Gruzdev explained to the media, for Rusagro the purchase of Valio with the rights to use the Viola brand is a strategy to expand the portfolio of b2c-brands. According to him, this will allow access not only to distribution, but also to the retail market in the segment of processed cheese, for the production of which it is possible to supply raw materials from other (and own) sites.

Marat Ibragimov, a senior analyst at Gazprombank, also shared his opinion about the deal. “The purchase of Valio assets in Russia is also an opportunity to use $137.2 mln that the company wanted to pay out to shareholders as dividends, but then it refused to pay out. So, this deal is beneficial for Rusagro in every way,” he said.

In fact, the Viola brand is Valio's key asset in Russia. Without the rights to use the brand, it is necessary to develop a new product, which is extremely difficult, especially considering the enormous competition in this market.

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