Brazil’s Minerva buying Marfrig beef processing property for $1.5b

By Gerson Freitas Jr.

Minerva SA, South America’s prime beef exporter, agreed to purchase some property from rival Marfrig International Meals SA for 7.5 billion reais ($1.5 billion).

The property, in Brazil, Argentina, Uruguay and Chile, will enhance the corporate’s cattle slaughtering capability by 44%, Minerva mentioned in a press release Monday. A down cost of 1.5 billion reais has been made, and JPMorgan Chase & Co. has dedicated to offering financing for the remainder of the transaction, the corporate added.

The deal comes at a time when Minerva is outperforming its extra diversified rivals, together with Marfrig and JBS SA, which have been hit by various setbacks together with excessive grain costs and a glut of hen and pork. The Sao Paulo-based firm additionally has benefited from rising cattle provides in South America when the US struggles with the tightest inventories in virtually a decade.

Minerva mentioned its two foremost shareholders — the household holding VDQ Holdings SA and the Saudi Agricultural and Livestock Funding Co. — have already got dedicated to approving the deal. The acquisition “uniquely enhances the present operations of the group in South America, maximizing business alternatives and operational synergies,” the corporate mentioned.

Marfrig, which is managed by its founder Marcos Molina, is searching for to streamline its operations after its acquisition of a majority stake in hen and processed-food big BRF SA two years in the past. The transaction with Minerva is aligned with its technique of “specializing in the manufacturing of branded beef and better value-added merchandise,” Marfrig mentioned in a separate assertion.

The deal will scale back the variety of Marfrig’s cattle slaughtering crops in South America to 4 from 17, with revenues within the area set to say no by 43% to fifteen.8 billion reais, in line with an organization presentation. In the meantime, the corporate expects to see larger margins as extra of its gross sales shall be tied to higher-added quantity merchandise. The meat producer stays answerable for U.S. beef producer Nationwide Beef Inc.

(Updates with particulars beginning in third paragraph.)