JBS Acquires US$ 1.8 billion in Debt From Marfrig to Own Seara Brand

06/10/2013 - 09h55

JBS will pay between US$ 2.6 billion and US$ 2.8 billion for slaughter and chicken and pork food processing from Marfrig Brazil, that includes owning the Seara brand.

The deal will be announced today. According to Folha, there is no outlay. JBS will acquire the value as debt. The transaction also includes the leather company Zenda, in Uruguay.

The agreement includes about 30 plants as well as brands and distribution centers. With the deal, the entrepreneur Marcos Molina is selling a third of the group he founded. Marfrig earned R$ 22 billion in 2012.

The operation will help reduce the group's debt, which reached R$ 13 billion in the first quarter. With the help of the Brazil's national development bank, BNDES, who owns 19% of the shares of the company, Marfrig had a fast grow with acquisitions in Brazil and abroad, but encountered difficulties in integrating operations. After the Seara sale, the group is basically leaving the market of processed chicken and pork food in Brazil, keeping only the beef market.

JBS, started in this market in the country with the purchase of Frangosul, became second place behind BRF, owner of Sadia and Perdigão brands. The deal, closed in less than 15 days, was directly between Molina and its main executives, Sergio Rial, and the brothers Wesleys and Joesley Batista, JBS owners.

Paulo Whitaker/Reuters

Workers process slaughtered cattle in a Marfrig Group slaughter house

BNDES is an important partner of the two companies. Pressed by creditors, Molina had been negotiating at the same time with JBS and BRF to sell assets. BRF only had interest in Asia assets, while Marfrig wanted to sell a larger package, to include Europe and the United States.

On Saturday, after closing the deal with JBS, Marfrig informed BRF that it was leaving the business. According to Folha investigation, the value offered by JBS "shone in the eyes" of Marfrig executives, who consider Seara the "Star Crown" brand. The unit, however, was the only one with losses. Marfrig is selling Seara for a much higher value when it acquired the company in 2009. At that time, Molina spent US$ 900 million (R$ 1.8 billion).

The deal with JBS, however, also includes assets Marfrig acquired from BRF in late 2011, valued at R$ 800 million, and smaller companies bought over time as Pena Branca and Da Granja.

As the company is acquiring the debts, JBS could try to negotiate with creditor banks, such as Bradesco and Itaú, reducing the value. In total, the assets represent a slaughter capacity of 2 million birds per day. BRF could slaughter 8 million birds per day. JBS and Marfrig did not respond to a request for interview.

Translated by SIMONE PALMA
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