Marfrig Buys OSI in Brazil and Europe

SAO PAULO - Marfrig Frigorificos e Comercio de Alimentos S.A., one of the largest producers of beef and beef products in Latin America, is to acquire OSI Group's businesses in Brazil and in several European countries.
calendar icon 24 June 2008
clock icon 3 minute read

The US$680 million deal includes 15 manufacturing plants for further processed and industrialized products and poultry slaughtering.

The whole package has annual revenues of US$2 billion.

The OSI Group businesses in Brazil involved in the deal are Braslo Produtos de Carnes Ltda., a meat products company and an important supplier for fast food chains in beef and poultry value-added products, Penasul Alimentos Ltda, a vertically integrated poultry processor and manufacturer of pork and poultry industrialised products and owner of the "Pena Branca" brand for the Southern region of Brazil and Agrofrango Industria e Comercio de Alimentos Ltda, a vertically integrated poultry processor.

In Europe, Marfrig will acquire OSI's Moy Park Group based in the United Kingdom, the fourth largest company in Northern Ireland, with manufacturing facilities in Northern Ireland, England, France and the Netherlands.

It is the largest vertically integrated poultry processor and supplier of further processed and value-added chicken products in the United Kingdom and also has further processing manufacturing facilities in France.

The acquisition also includes Kitchen Range Foods Limited, with activities in the production and distribution of food products including frozen, further processed vegetables, non-meat meal substitutes and bakery products in the United Kingdom, and Albert Van Zoonen BV, with activities in the production and distribution of frozen further processed food products in the Netherlands.

The Brazilian and European businesses being purchased are fully aligned with each other and will become aligned with the other divisions of the Marfrig Group in supplying chicken, beef and other animal protein products to its European customers.

The deal is valued initially at US$680 million in a combination of cash (US$400 million) and Marfrig common shares (US$280 million at market value following completion of the transaction) and with a potential additional payment in the future of up to US$220 million linked to future performance in the European businesses.

Commenting on the takeover the British National Farmers' Uniont said: "The UK poultry industry has built a strong and loyal consumer base for British chicken, with the use of the Great British Chicken - Red Tractor brand. We are encouraged this major Brazilian meat company is looking to invest in our farming industry. However it is important this move doesn't just facilitate the importation of meat and carcasses from outside the UK.

"We are looking forward to working closely with Moy Park and Marfrig in developing the British Chicken brand and reputation, and in forging close relationships between them and our farmer members.

"The sale by OSI comes at a time for the industry of soaring feed and energy costs, with only marginal price increases for the end product in return."

The NFU went on to say: "While we look forward to working with Marfrig we need to be sure we are not welcoming a ‘Trojan horse’ into our midst, in the form of a large processor and potential importer of South American beef and other imported meat."

The NFU is seeking an urgent meeting with Marfrig and Moy Park to discuss the implications of the move for its farmer members.

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