Written By Gerson Freitas Jr.
Minerva SA, South America’s top beef exporter, agreed to buy some assets from rival Marfrig Global Foods SA for 7.5 billion reais ($1.5 billion).
The assets, in Brazil, Argentina, Uruguay and Chile, will boost the company’s cattle slaughtering capacity by 44%, Minerva said in a statement Monday. A down payment of 1.5 billion reais has been made, and JPMorgan Chase & Co. has committed to providing financing for the rest of the transaction, the company added.
The deal comes at a time when Minerva is outperforming its more diversified rivals, including Marfrig and JBS SA, which have been hit by a number of setbacks including high grain prices and a glut of chicken and pork. The Sao Paulo-based company also has benefited from growing cattle supplies in South America when the US struggles with the tightest inventories in almost a decade.
Minerva said its two main shareholders — the family holding VDQ Holdings SA and the Saudi Agricultural and Livestock Investment Co. — already have committed to approving the deal. The acquisition “uniquely complements the existing operations of the group in South America, maximizing commercial opportunities and operational synergies,” the company said.
Marfrig, which is controlled by its founder Marcos Molina, is seeking to streamline its operations after its acquisition of a majority stake in chicken and processed-food giant BRF SA two years ago. The transaction with Minerva is aligned with its strategy of “focusing on the production of branded beef and higher value-added products,” Marfrig said in a separate statement.
The deal will reduce the number of Marfrig’s cattle slaughtering plants in South America to four from 17, with revenues in the region set to decline by 43% to 15.8 billion reais, according to a company presentation. Meanwhile, the company expects to see higher margins as more of its sales will be tied to higher-added volume products. The meat producer remains in control of U.S. beef producer National Beef Inc.