JBS has unveiled two multi-billion dollar deals in one day, tightening its stranglehold over the Brazilian meat market, and storming into a leading position in American poultry.
JBS, the world's largest beef processor, agreed to buy 64% of Texas-based Pilgrim's Pride for $800m, as well as buying out holders of $1.75bn of debt in the bankrupt poultry giant.
Minutes later, the beef giant revealed that a merger with rival Bertin through the creation of a holding company in which JBS investors will have the majority stake.
The deals will add businesses with annual earnings of approaching $13bn to the JBS empire, which will end up with revenues of $30bn a year, a spokesman said, putting it in line with America's Tyson.
JBS shares stood 6.8% higher at R$8.49 in late deals in Sao Paolo.
'Difficult time'
Wesley Batista, the JBS chief executive, said the group was "proud" to enter the US poultry industry, and would work with Pilgrim's Pride managers to improve competitiveness both in America and abroad.
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JBS's foreign acquisition trail
2008 50% of Inalca, EU, $328m
2008 Smithfield Beef, US, $565m
2008 Tasman Group, Australia, $107m
2007 Swift Foods, US, $225m plus debt
2005 85% of Swift Armour, Argentina, $200m |
JBS added that it was seeking equity investments into its US division, which it has sought to float in New York, to keep group leverage "at its current levels".
Bo Pilgrim, the Pilgrim's Pride chairman, said: "While the past year has been a difficult time for everyone involved in our restructuring, I take pride in knowing we have a plan in place to pay back our creditors in full and preserve a great deal of value for our existing stockholders."
The takeover plans envisage current Pilgrim's Pride shareholders retaining ownership of 34% of the company, which would emerge from bankruptcy around December, a year after it entered, dented by higher feed prices, lower demand for meat and steep borrowings.
The deal is subject to approval by bankruptcy courts, as well as antitrust authorities which last year sank JBS's last US takeover attempt, of Kansas-based National Beef Packing.
Third time lucky
The deal with Bertin, Brazil's second-largest beef exporter, would see its controlling shareholders and JBS's largest investors place their stakes in a holding company for both groups.
JBS's two biggest investors, J&F Participacoes and ZMF Fundo de Investimento, would own about 60% of the holding company.
Bertin, said last month it had given up on plans to merge with Marfrig, another Brazilian meat giant, and had been expected to seek a public flotation.
it achieved earnings of R$7.5bn in 2008.
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