brazil's marfrig to buy keystone foods - chicken rotisserie grill for sale
SAO PAULO (Reuters)-
Marfrig Alimentos SA, a Brazilian processing food company (MRFG3. SA)
The company said it had reached an agreement to buy major U. S. oil products. S.
Keystone food dealer for $1.
26 billion, trying to expand to some of the world's largest chain restaurants as a supplier.
According to the terms of the agreement, Sao Paulo-
S. -based Marfrig plans to buy a 100% stake in Keystone from Lindsay Goldberg LLC, USAS.
Private equity company
The Brazilian company has expanded through acquisitions over the past two years because its competitors have been sold after the global recession, and the company will issue debt convertible into shares to pay for Keystone's acquisition.
"This acquisition has made Marfrig a supplier of McDonald's entire international chain (Corp (MCD. N)), Campbell’s (
Campbell Soup (CPB. N))
ConAgra (Metro)Foods Inc (CAG. N)), Yum Brands (Inc (YUM. N))and Chipotle (
Mexican Barbecue CompanyCMG. N))
Marfrig said in a regulatory report late Monday.
The acquisition comes as Marfrig strives to integrate the food processor Seara, which initially focused on meat packaging, into its business.
Marfrig's stock fell 16% this year, compared to six.
The benchmark Bovespa index fell 2%.
The recent acquisition of the company may not give the company the expected strategic advantage, which highlights investors' concerns.
Marfrig's share price fell by 3. 2% to 16.
Real 30 on Tuesday, the biggest intraday drop since May 25.
"The announced acquisition could raise the execution risk of Marfrig, which has been highly leveraged, which is being integrated with Seara and does not generate positive cash flow, goldman Sachs analysts Gustavo Weiman and Claudio Rensing wrote in a note to clients.
Both analysts advised investors to sell Marfrig shares.
Marfrig is the latest Brazilian food company to expand its overseas business, taking advantage of the growing demand for protein in China and India, the world's most populous country.
Brazilian companies have also stepped up acquisitions in the United States, and after the worst recession since 1930, the valuation of Brazilian companies is still very low.
Jbs sa, Brazil (JBSS3. SA)
The world's largest meat processing plant has acquired a 64% stake in the U. S. bankruptcy company. S.
Chicken producer Pilgrim's Pride is in the bidding ranking.
$0. 8 billion last year.
Marfrig said in the document that increasing the resources and management of Keystone will enable it to expand its business and better meet the growth opportunities of the global food market.
The acquisition requires approval from the antitrust agency, Marfrig said, adding that it expects to complete the transaction in the second half of 2010.
Keystone said it pioneered the development of boneless chicken nuggets, serving more than 28,000 restaurants in 13 countries, earning $6 last year.
4 billion from its food and distribution business.
"The addition of these two global companies will benefit our global customers and employees," Key Stone Foods CEO Jerry Dean said in a statement . ".
If the deal is successful, the Keystone acquisition will help double Marfrig's total revenue, according to 2009 data. The U. S.
The company earns $6.
Revenue last year was $4 billion, compared to $6 for Marfrig.
There are 1 billion people including Seara.
Marfrig plans to sell 2 units to fund the purchase.
Real 5 billion ($1. 4 billion)of five-year real-
A note that can be converted to a stock.
The company said the bonds would be sold privately, meaning only a small number of investors (preferably shareholders) were allowed to bid for the securities.
Bevan Rosenbloom, debt analyst at Royal Bank of Scotland, said the sale of convertible bonds, or securities converted into new shares after a period of time, would prevent people from taking so much debt on the company
"I think this is a value-added credit acquisition because of the strong participation of shareholders," he said in a telephone interview in Greenwich, Connecticut . ".
The yield of Marfrig 9.
USG5814RAA61 = 625% bonds due on November 2016 fell to 10 on Tuesday.
10 to 30%
According to Thomson Reuters prices, the previous trading day was 40%.
Marfrig's debt is 4.
By the end of the year, its capital base was six times larger.
Analysts at Goldman Sachs say the company is "highly leveraged" at the moment ".
National Development Bank of Brazil.
International finance comments on Tuesday quoted market sources familiar with the deal as saying that UL was seen as the most likely candidate to buy Marfrig notes.
The board of directors of the company will meet on June 30 to approve the issuance of bonds.
The financier consulted by the publication said BNDES was considered the only lender able to absorb the issue in private placement.
IFR is a publication by Thomson Reuters.