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PRIVATE EQUITY

Investors creating a mixed grille

SLOVAKIA, the Czech Republic, and Hungary are currently undergoing large investments in their meat production sectors, a process which is set to continue for some time. Among the Visegrad Four countries only Poland is unlikely to see considerable changes in the industry: the reason being that large-scale consolidation has already taken place there.

SLOVAKIA, the Czech Republic, and Hungary are currently undergoing large investments in their meat production sectors, a process which is set to continue for some time. Among the Visegrad Four countries only Poland is unlikely to see considerable changes in the industry: the reason being that large-scale consolidation has already taken place there.

The wave of acquisitions in the Slovak meat industry began about two years ago. But investors are not only interested in local meat producers: they have focused on the whole central European region.

The acquisition of a Hungarian traditional meat producer, Debreceni, which was founded in 1894, by Slovak private equity group Penta Investments is one of the latest acquisitions of its kind. Apart from Debreceni, Penta has a majority share in two other Slovak meat producers and is considering an acquisition in the Czech Republic.

J&T Finance Group some time ago acquired three meat producers in the Czech Republic. Another Slovak group, Eco-Invest, has bought three companies in the meat industry in Slovakia.

The meat industry is still not consolidated and specialised, said Martin Danko, spokesman for Penta Investments.

“There are numerous smaller producers who make almost the same portfolio of products,” he told The Slovak Spectator. “Due to global pressures related to the growing costs of raw materials, this state is not sustainable in the long term.”

This is why, he added, the meat industry presents an opportunity for private equity investors to consolidate the industry.

J&T Finance Group regards industries which generate products with a high added value the most interesting investments, and the meat production is such an industry, J&T’s Martin Maňák told The Slovak Spectator in an earlier interview.

Penta made its first investments in the meat industry in February 2007 when it bought PM Zbrojníky, the fourth-largest meat producer in Slovakia. In June the following year, Penta acquired all the shares in the largest Slovak producer, Mecom. At the same time, it became the owner of a 99-percent share in Debreceni, Hungary’s second-largest meat producer.

“Our entry is part of our strategic plan to create a central European meat producers holding,” said Jozef Špirko, a partner in Penta Investments. “Debreceni is to become a main part of this.”

Debreceni decided to cooperate with a strong partner because it believes in the need to consolidate producers in the region, said Gyula Roman of the Debreceni group. “We will be happy to continue being a part of the development of Debreceni group and the emerging holding,” he said.



Penta Investments wants to optimise production in its acquisitions in such a way that each plant produces what it is best at, from the point of view of quality and efficiency. The restructuring will also affect trade, logistics, storage and purchasing processes.

“Our aim is to create an international holding and to use the synergies which this union will bring to the maximum extent,” said Danko. “Naturally, as far as brands are concerned we will sensitively handle proven local product brands, especially those with a strong tradition.”

Penta Investments is currently negotiating the acquisition of meat producers in the Czech Republic, according to Danko. It expects that a final decision on an acquisition could be made by the end of this year.

“We have decided to consolidate the markets in Slovakia, the Czech Republic, and Hungary,” he said and added: “In Poland, where there are strong international players, consolidation has already taken place. We suppose that in several years only strong players who are able to use synergies and savings from their size will have the opportunity to succeed.”

In 2007 the investment group Eco-Invest bought MäsoSpiš, a meat producer in Spišská Nová Ves. In addition, Eco-Invest owns meat producers Fabuš in Myjava and Tauris in Rimavská Sobota, which it bought in 2006.

The J&T Group’s meat industry investments include Kmotr-Masna Kroměříž, Krahulík – Masozávod Krahulčí, and Vysočina Hodice, all in the Czech Republic.


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