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KTG Agrar sells out of Russian meat group for 'good profit'

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KTG Agrar, after two years, sold out for "a good profit" its stake in a Russian agricultural operator Sojus Group, in a disposal which heralded a shake-up of the German group's board.

KTG, which controls some 45,000 hectares of land in Germany, Lithuania and Romania, said that it had sold for more than E20m its investments in Sojus Group, which focuses in the main on pork production in the Russia's Black Sea region.

The sale of the 17.5% stake to meat-to-football tycoon Clemens Tönnies, the majority shareholder in Sojus, followed a "thorough review", said Siegreid Hofreiter, the KTG chief executive.

However, Mr Tönnies - head of the Tönnies meat group, Germany's biggest pork processor, and chairman of Shalke 04 football club – had made an "attractive offer".

KTG, which had in its accounts shown a value of E11.52m for its Sojus stake, made a "good profit" on the deal, a person familiar with the group told Agrimoney.com.

'Long-term potential'

The disposal comes two years after KTG announced the purchase of a stake in Soyus, in a deal Mr Hofreiter at the time said would allow the group to exploit the "outstanding long-term potential" of Russia, "one of the world's key markets for the agricultural sector.

"We have gotten to know the region and its people in recent years and we are convinced of the opportunities," he said then.

While much of the Russian economy has since had a tough time, hurt by sanctions, high inflation and a weakened rouble, the country's pork producers have been able to push through substantial rises to meat prices, with limits on imports only increasing the demand for domestic supplies.

'Strong and unique '

KTG said its disposal would allow it to focus its farming activities "entirely" on Germany and the European Union.

The group had gained a "strong and unique selling proposition for the international market" by keeping tight control over a locally-based food supply chain, Mr Hofreiter said on Friday.

The group is developing exports to markets including China.

The deal also heralded the departure from the board of Benedikt Fortig, whose responsibility for Eastern Europe is no longer needed" KTG said.

Bert Wigger is also to leave the board, after the completion of the "massive investment phase" at KTG he was hired to oversee.

KTG shares stood 1.4% higher at E14.67 in Frankfurt in afternoon deals.

By Agrimoney.com

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