SAO PAULO, June 8 Brazil's JBS SA,
the world's largest meat producer, will announce the purchase of
Brazilian poultry producer Seara, a unit of Marfrig Alimentos SA
, in the coming days, a source with knowledge of the
operation told Reuters on Saturday.
"All I can say is that the deal was done," the source said
without providing additional details.
The source was unable to say if the purchase is of Marfrig's
Seara Brasil unit, or of the larger Seara Foods division. In
addition to Seara Brasil, Seara Foods also controls Moy Park and
Keystone, meat packers based in the United States.
Calls to JBS's press office were not answered on Saturday
outside of normal business hours.
Sales at Seara Brasil, Seara Foods' largest unit, jumped 48
percent in the first quarter of 2013 to 2.05 billion reais ($962
million) and was responsible for about 30 percent of Marfrig's
Marfrig shares have lost 12 percent of their value this year
on concern that the company may not be able to reduce its high
level of debt.
Marfrig, which had 13 billion reais ($6.1 billion) of debt at
the end of 2012, is trying to cut that total by 2 billion reais
by the end of this year. Much of the debt was accumulated as
Marfrig bought smaller rivals in an attempt to compete with
Brazilian meat-packing giants such as JBS as the Brazilian and
international food processing industry consolidated.
To slash debt the company is working to cut costs, closing
underperforming operations and putting assets up for sale,
Sergio Rial, president of Seara Brasil, said on May 14. Rial is
slated to become president of Marfrig in 2014.
In April, Cade, Brazil's anti-trust regulator approved JBS's
purchase of Brazil's Bertin, and 11 smaller meat packers but
said it would monitor JBS's position in the Brazilian beef
The JBS purchase of Seara may not raise the same concerns at
Cade because Seara's main products are poultry and pork.
JBS's first entry into Brazil's poultry market was in May
2012 when it leased assets owned by Frangosul. The Frangosul
transaction, though, is primarily aimed at the export market.
JBS has poultry operations in the United States through its
Pilgrim's Pride brand.
The purchase, if approved, will make JBS a major player in
the Brazilian poultry market and put it in direct competition
with BRF SA, the biggest producer and exporter of
poultry in the country.