RZ Agro Holding RZ Agro

On April 4, 2012, Sistema announced the formation of RZ Agro Holding Ltd. - a joint venture (JV) with RZ Agro Ltd., established in 2009 and affiliated with Sierentz Group. RZ Agro Ltd. and Sierentz Group are controlled by several members of the Louis-Dreyfus family.

As previously announced, AFK Sistema OJSC acquired in the Rostov region two farms for growing grain and oilseeds with a total land bank area of ​ ​ about 46 thousand hectares. These farms will be included in the joint venture as a contribution of JSC AFK Sistema. RZ Agro Ltd. will invest in the joint venture an existing agro-industrial holding, which includes the management company Russkaya Zemlya LLC and three farms in the Rostov region for growing grain and oilseeds with a total land bank area of ​ ​ about 41.5 thousand hectares.

If certain conditions are met by 2013, Sistema will own 50% of the share capital of the joint venture. The valuation of assets under the transaction can be adjusted depending on the achievement of production indicators.

The completion of the transaction is due to the fulfillment of a number of conditions, including the fulfillment of certain transaction-related agreements and obtaining approval from the Federal Antimonopoly Service, which is expected in the second quarter of 2012.

strategy of the joint venture involves increasing the area of ​ ​ arable land through organic growth and strategic acquisitions in order to create a leading agricultural company in Russia. In the future, the joint venture will analyze the possibility of acquiring land plots in key grain-producing regions - in the south of Russia and in the Central Black Earth Region, which will create effective agricultural clusters with access to domestic and foreign markets, - said Mikhail Shamolin, President of AFK Sistema. "We are optimistic about cooperation with our JV partner, who can bring modern agro-industrial and management technologies to the business."

"We firmly believe in the success of RZ Agro Holding," said Gérard Louis-Dreyfus and Peter Mann, representatives of shareholders of RZ Agro Ltd. "The grain production sector in Russia has great potential due to the low cost and unique geographical location of Russia, as well as taking into account the growth in the size and standard of living of the population in the world."

"The creation of the joint venture will significantly increase our ability to consolidate the best arable land into regional agricultural clusters, as well as increase production efficiency through a combination of transparent corporate structure, management professionalism, cost reduction and increased investment in modern technologies and equipment," said Stéphane Mac Farlane, CEO of Russian Earth.