Brazil's JBS Acquires Moy Park for $1.5 Billion -- Update

By Rogerio Jelmayer 

SÃO PAULO--Brazil's JBS SA, the world's biggest meat packager, acquired the European poultry unit of its local rival Marfrig Global Foods SA in a deal worth $1.5 billion, showing a continued hunger for acquisitions.

JBS said late Sunday that it agreed to acquire U.K.-based Moy Park from Marfrig, which is Brazil's third-largest food-processing company. The purchase price includes the assumption of Moy Park debt worth 300 million pounds ($476 million) by JBS.

"This transaction represents an important step in JBS's strategy to grow its portfolio of prepared and convenient products with a high value-added portfolio," JBS said in a statement. "In addition, this acquisition increases the company's geographic diversification, with a relevant expansion of its operations in Europe."

Marfrig investors were cheered by the announcement, with the company's shares jumping 8.7% higher to 25.25 reais ($8.22) in midmorning trading. It was the biggest increase in the benchmark Ibovespa index. JBS's shares rose 0.36% to 16.52 reais, while the Ibovespa was little changed with a decline of 0.15%.

JBS, which began as a butcher shop in 1953, has completed more than a dozen acquisitions in Brazil and internationally since 2005. The company is the world's largest producer of proteins, with operations in 24 countries on five continents.

JBS is controlled by Brazil's Batista family, which owns a 41.1% stake in the business that was founded by José Batista Sobrinho, whose initials form the company's name.

Some of Brazil's largest state-controlled banks are also big shareholders, including the national development bank, or BNDES, with a 23.19% stake, and Caixa Econômica Federal, with 10.07% of the shares.

JBS's strategy has had positive effects on earnings, posting its highest-ever quarterly net profit in the first quarter, of 1.4 billion reais, up from 70 million reais in the year-ago period.

The Moy Park deal still depends on regulatory approvals, including from European Union antitrust authorities, JBS said.

Marfrig acquired Moy Park in 2008 for about $680 million. The company plans to use the proceeds from the sale to decrease its debt.

"The sale will improve significantly our capital structure, and this is transformative for our company," Marfrig's investor-relations chief, Marcelo Di Lorenzo, said during the post-announcement conference call with analysts.

Marfrig sees the deal allowing it to shed nearly five billion reais of debt; it had 13.4 billion reais in debt at the end of the first quarter.

Write to Rogerio Jelmayer at [e-mail]

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