Brazil meat company Marfrig to buy controlling stake in National Beef

Food acquisition news : Marfrig Global Foods, a leading Brazilian meat company has made a deal of $969 million to acquire a controlling stake of 51% in National Beef Packing, a US beef processing company.

Through the deal, the Brazilian meat packing company hopes to establish itself as the second largest beef processor in the world that will boast $13 billion of annual sales.

It will also boost the leverage ratio of Marfrig Global Foods apart from helping it gain access in the eastern beef markets of Japan and South Korea.

Marfrig Global Foods will acquire 48% of the 51% in National Beef Packing from US conglomerate Leucadia National for about $900 million in an all-cash deal. After the deal is completed, Leucadia National will retain 31% of its original stake of 79% in the US beef processor.

Business deal done. Photo courtesy of adamr at FreeDigitalPhotos.net.

Leucadia National had acquired the 79% stake in National Beef for $868 million in 2011.

Rich Handler – CEO of Leucadia National and Brian Friedman – President of Leucadia, jointly said: “As we have consistently stated, we believe that National Beef is an outstanding company, but was too large and concentrated of an investment for Leucadia.

“We were patient and persevered as National Beef went through an exceptional downturn and then we navigated deliberately toward a transaction that would achieve both our near-term and long-term objectives.”

The remaining 3% of the 51% stake will be acquired by Marfrig Global Foods for about $69 million from other shareholders.

Post completion of the deal, Marfrig will be partnered in National Beef by Leucadia National along with US Premium Beef with a stake of 15% and other shareholders with a stake of 3%.

Tim Klein – President and CEO of National Beef president, commenting on Marfrig acquisition of National Beef stake, said: “I am excited to welcome the Marfrig group as a partner in National Beef. Their broad global food platform will further strengthen our efforts to build our brand in new and existing markets as the demand for high quality U.S. beef grows.

“This transaction will be transparent to our valued employees, suppliers and customers.”

Based in Kansas and founded in 1992, National Beef Packing is among the top five US beef processors with exports to 40 countries – which include Japan where there is a ban on Brazilian beef exports. The US beef processing company is into production of fresh, chilled and further processed beef and beef by-products for its customers in the US and across the world.

National Beef, which has more than 8,000 employees, had generated $7.3 billion in sales last year. The US beef processing company is said to have a slaughtering capacity of 12,000 heads of cattle per day.

Commenting on Marfrig acquisition of National Beef stake, Martin Secco – CEO of Marfrig, said: “The acquisition of National Beef represents the realization of a unique opportunity.

“With the transaction, we will have operations in the world’s two largest beef markets, will gain access to extremely sophisticated consumer countries and will be able to grow while maintaining rigorous financial discipline.”

Marfrig acquisition of National Beef stake is expected to be completed in Q2 2018 subject to certain conditions and regulatory approvals.