Russia: Damate in the race to buy bankrupted Donstar

Turkey company Damate is interested in the duck business of Donstar. Photo: Koos Groenewold

Russia’s biggest turkey meat producer Damate showed interest in buying the bankrupted duck meat company Donstar, Russian newspaper Kommersant reported. Just recently Damate started the New Duck Technologies branch in Rostov Oblast, where the Donstar poultry farms are located. This new company could be used to acquire Donstar assets.

Duck producer Donstar itself has roots in the turkey sector as it was established in 2010 as a subsidiary of the Russian turkey meat producer Eurodon. The company built 60 poultry houses, a feed mill and some other facilities in Rostov Oblast. Donstar had a production capacity of 27,000 tonnes of duck meat in 2017 and announced plans to launch the second stage of the project in Rostov Oblast with a planned capacity of 70,000 tonnes per year. Also Donstar wanted to invest $ 20 million in building a duck complex in the Moscow Oblast with a potential output of 30,000 tonnes per year. However, over the years Donstar accumulated a debt of Rub6.9 billion ($ 95 million) and went bankrupt in 2020.

The company could be sold at the price lower than Rub6.53 billion ($ 93 million), which the company owned to the Russian state-owned bank Rosselhozbank – it’s biggest debt-holder, said Stanislav Volkov, director of the Russian rating agency National Credit Ratings. It would take $ 100 million to build similar production facilities in Russia from scratch, Kommersant estimated. Neither Donstar, nor Rosselhozbank have commented on the takeover so far. Damate is also considering acquiring Eurodon, but there is no official confirmation of those plans.

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Market is still weak

The demand for duck meat in Russia is rather weak – this is a seasonal product, said Sergey Yushin, chairman of the Russia’s National Meat Association. Getting Donstar’s farms and plants up and running again, Damate could cater for most of Russians duck demand. ‘’Consumption could grow alongside with the production growth,” Yushin said. Russia has a strong potential in exporting duck meat, including to the Arab Peninsula and Asia, specifically to China, according to Sergey Lakhtyukhov, general director of the Russian Union of Poultry Producers. And yet the demand on the domestic market remains rather weak. In 2019, it was estimated at 50,000 tonnes per year, Moscow-based think tank Rincon Management reports.

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