JBS reportedly agrees to buy Brazilian poultry unit of Seara Foods from Marfrig Alimentos for between US$2.5B and US$3B; deal to be announced on June 10

Nevin Barich

Nevin Barich

SAO PAULO , June 9, 2013 () – JBS SA, the world’s largest beef producer, agreed to buy some food-processing assets from Marfrig Alimentos SA, two people with knowledge of the deal said.

The agreement involves assets from the Seara Foods unit, according to the people, who spoke on condition of anonymity because the deal will be announced tomorrow. They declined
to provide details or say which Seara assets are part of the deal. Both JBS and Marfrig are based in Sao Paulo.

The Wall Street Journal reported JBS will buy the Brazilian poultry unit of Seara for $2.5 billion to $3 billion, citing four unidentified people close to the deal.

The acquisition of Seara local assets would turn JBS into the world’s largest poultry producer, surpassing Springdale, Arkansas-based Tyson Foods Inc. For Marfrig, the most indebted meatpacker in the Western Hemisphere, the deal means a reduction in net debt that jumped seven-fold in the past five years to about 10 billion reais ($4.7 billion) as of March 31.

Spokesmen for Marfrig and JBS, who can’t be named because of internal policy, declined to comment on the deal when contacted by Bloomberg News.

CHICKEN BUSINESS

JBS entered the chicken processing business in 2009 with the acquisition of a controlling stake in Greely, Colorado-based Pilgrim’s Pride Corp. Last year the company leased Brazil poultry plants from France’s Doux SA and Agroveneto.

Marfrig owns three food-processing units under the Seara Foods umbrella: Seara Brasil, which supplies chicken nuggets, sausages and hot dogs to the Brazilian market; Keystone Foods, the U.S. largest hamburger patties supplier to McDonald’s Corp.; and Moy Park, in Europe, maker of ready-to-eat chicken meals endorsed by celebrity chef Jamie Oliver.

Seara Brasil’s 32 plants slaughter about 1.7 million chickens daily, according to the company’s website.

Marfrig’s net debt equals 4.4 times earnings before interest, taxes, depreciation and amortization. Marfrig aims to cut gross debt by as much as 2 billion reais, Sergio Rial, head of the food-processing unit Seara Foods, said May 14.

JBS and Marfrig officials will hold a press conference tomorrow at 8:30 a.m. in Sao Paulo, according to a statement from both companies today.

The JBS-Marfrig agreement was reported yesterday by O Estado de S.Paulo newspaper columnist Sonia Racy.

Link to company news:JBSS3 BZ CN Weighted Average Cost of Capital: JBSS3 BS Equity WACC Top stories in Portuguese: TOP BR

--Editors: Adriana Arai, Mike Millard

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.

Share:

About Us

We deliver market news & information relevant to your business.

We monitor all your market drivers.

We aggregate, curate, filter and map your specific needs.

We deliver the right information to the right person at the right time.

Our Contacts

1990 S Bundy Dr. Suite #380,
Los Angeles, CA 90025

+1 (310) 553 0008

About Cookies On This Site

We collect data, including through use of cookies and similar technology ("cookies") that enchance the online experience. By clicking "I agree", you agree to our cookies, agree to bound by our Terms of Use, and acknowledge our Privacy Policy. For more information on our data practices and how to exercise your privacy rights, please see our Privacy Policy.