Brazilian Company Becomes McDonald’s Main Supplier for Hamburger and Chicken

MarfrigBrazilian company Marfrig Alimentos SA, Latin America’s second-largest beef producer, agreed to buy meat processor US based Keystone Foods LLC for US$ 1.26 billion to become a supplier to restaurant chains such as McDonald’s Corp.

Marfrig, based in São Paulo, Brazil will sell 2.5 billion reais (US$ 1.4 billion) of five-year bonds convertible into stock to finance the acquisition of Keystone from private equity firm Lindsay Goldberg LLC, according to a regulatory filing published this week.

Marfrig, in a separate filing Tuesday said it plans to issue American depository receipts.

The purchase will make Marfrig a supplier of chicken nuggets, hamburgers and other meat products to McDonald’s, sandwich-shop chain Subway Restaurants and Campbell Soup Co. in 13 countries including the US, France and Australia.

The Brazilian meatpacker has expanded production through 38 acquisitions in the past three years, including the takeover of Cargill Inc.’s poultry and pork business in Brazil for US$ 705.2 million.

Net sales may almost triple at Marfrig this year to 27.8 billion reais after the acquisition, from 9.6 billion reais in 2009.

The bonds that Marfrig plans to sell in Brazil’s domestic market this year will mandatorily be converted into shares after five years. They’ll be converted at 21.50 reais per share.

Brazil’s state development bank BNDES is seen as the most likely candidate to buy the Marfrig notes, International Financing Review said on Tuesday, citing market sources with knowledge of the deal. The company’s board will meet on June 30 to approve the debt issuance. BNDES is seen as the only lender capable of absorbing such an issuance in a private placement, financiers consulted by the publication said.

Keystone, based in West Conshohocken, Pennsylvania, produces more than 1.6 billion pounds of poultry products and 388 million pounds of beef products a year and distributes them to about 30,000 restaurants worldwide, according to its website. It reported net sales of US$ 6.4 billion in 2009.

“The joining of these two global companies will benefit our clients and employees globally,” Keystone Foods Chief Executive Officer Jerry Dean said in the statement.

Lindsay Goldberg LLC, based in New York, is a private equity firm founded by Alan Goldberg and Robert Lindsay, respectively a former private equity chief and former managing director at Morgan Stanley.

Marfrig is the latest Brazilian food company to expand abroad, tapping growing demand for protein in China and India, the world’s most populous countries. Brazilian companies are also stepping up takeovers in the United States, where company valuations remain low after the deepest economic recession since the 1930s.

Brazil’s JBS SA, the world’s biggest meat processor, bought a 64% stake in bankrupt US chicken producer Pilgrim’s Pride Corp for US$ 800 million last year.

Mercopress

Tags:

You May Also Like

Enaex: Brazil Discusses How to Compete in a Globalized World

Brazil's National Foreign Trade Meeting version 28 (Enaex), which started Thursday, November 27, at ...

Chinese and Korean Mafias Lead Piracy in Brazil

The creation of a Division for the Repression of Contraband and an Anti-Piracy Division ...

125 Countries in Brazil Debating Child Sex, Trafficking and Pornography

Close to 3,000 participants from over 125 countries have gathered in Rio de Janeiro, ...

Slavery and Freedom

By Brazzil Magazine Most African Brazilians today are poor and most of the poor ...

Water Wonderland

Recife is full of surprises: bright sun, ever-blue skies tempered by the ocean breeze, ...

Brazil’s Lula: It’s Our Fault

Brazilian President Lula told an audience of big investors in the US that his ...

Brazilian Congress Wants Access to Corruption-Linked Adman’s Account in the US

Senator DelcÀ­dio Amaral, from the Workers Party of Mato Grosso do Sul state, president ...

Jeitinho, Brazil’s Creative Way to Break the Law and Feel Virtuous About It

American historian Robert M. Levine, director of Latin American Studies at the University of ...

US Flight Safety Foundation Urges Brazilian Police to Keep Off the Boeing’s Inquiry

The American NGO Flight Safety Foundation has released a note in which it calls ...

Amid Recriminations Among Members Brazil Convenes Mercosur Council

Brazilian capital BrasÀ­lia will host this Monday, October 27, the Mercosur Council, which is ...