Campofrio to buy Polish meat groups

Eurofood, Dec 3, 1998

Poland's two largest meat groups, Morliny and Ostroleka, have been acquired by the Spanish firm Campofrio for Pta1.97bn (ECU487.6m). The Spanish firm has acquired 30.8% of Morliny and 33% of Ostroleka, giving it 76% control of the latter group via Morliny' s own 43% stake in its compatriot. Campofrio will now make a bid for 100% control of Morliny at a price of PIZ18 per share, valuing the whole company at some Pta4.3bn. The seller was the Hetman Investment Fund.

Export launch to US

Campofrio already has a toehold in eastern Europe via a Romanian processing plant and its Russian unit CampoMos. This latter firm has been hard hit by the current economic crisis in Russia, prompting the Spanish firm to look for safer investments in some of the more stable economies in the former Communist block. The Polish plants will not only supply their domestic market, but will also be used to boost Campofrio's exports to Germany, the Baltic states and other central European countries. Morliny currently sells 80% of its output to the domestic market, 15% to western markets, and the remaining 15% to eastern markets. Its products will now also be exported to the US, where there is a significant Polish population, via Campofrio's link up with US meat group Hormel Foods.

Cash for investment

Morliny and Ostroleka together produce some 64 000 tonnes of meat products a year, but have production capacity of 100 000t. Their combined market share is just 4%, but this is not unusual in Poland where there has been little consolidation in the meat products sector and a plethora of small companies still dominates. Campofrio has said it plans to invest heavily in new machinery and better raw materials for Morliny, in a bid to lift its market share to a round 9%. Profits this year are expected to grow by 20% in value terms to around Ptal. 1 bn. Poland is the fourth-largest pork producer in the world, and has a per capita consumption level twice that seen in Spain, Campofrio said.