Brasil Foods, Marfrig finalize asset exchange

On August 1, poultry and pig meat processor Seara Foods, part of Marfrig Alimentos S.A., assumed two Brazilian production plants in Brasília, Distrito Federal, and Várzea Grande, Mato Grosso, per the terms in the Brasil Foods and Marfrig business agreement in March.
This action concludes the interchange of assets between the companies, which gave Seara Foods a total of 10 assets, including eight distribution centers and 13 brands that were formerly part of BRF. The acquisition allows Seara Foods to increase its 2.5 million daily capacity of chicken slaughter 3 million, and its 11,200-metric-ton pig slaughter to 13,700 metric tons.
"We understand that the assets of BRF may accrue US$1.7 billion in revenue," said David Palfenier, CEO of Seara Brasil, parent company of Seara Foods. 

Marfrig to sell US, European distribution unit

Brazil's poultry, pork and beef supplier, Marfrig, is selling its U.S. and European distribution unit for $400 million to Martin-Brower Co. in order to boost its cash position, according to the company.
Marfrig acquired the unit in 2010 as part of the $1.26-billion purchase of Keystone Foods Holdings LLC. The company decided to sell the unit because it focuses on logistics, while Marfrig is focused on the meat business, according to Chief Executive Marcos Molina. "Since we took over Keystone, we knew we would eventually sell [the unit]," he said.
The sale is expected to conclude in the fourth quarter of 2011.

Marfrig, after Keystone Foods acquisition, has footprint in 22 countries and USD 16 billion in annual sales

Marfrig, the Brazilian meats and processed meats giant, acquired, two days ago, the American Keystone Foods for US$ 1.26 billion. It became the largest Brazilian transnational company operating in the production and processing of beef, poultry and pork. Keystone Foods, head-quartered in Pennsylvania, is one of the world’s biggest processed meat suppliers for fast food restaurants, having giants like McDonald's, Campbell's, Subway, ConAgra, Yum Brands and Chipotle among its clients.
Owing 54 industrial units in USA, New Zealand, Australia, EU, Asia and Middle-East, Keystone supplies more than 28 thousand fast food restaurants and had net sales of US$ US$ 6.4 billion in 2009. The figure, close to Marfrig’s in 2009 - US$ 5.72 billions (at today’s exchange rate) – will increase the company net sales to US$ 16 billion, according to its CEO, Marcos Antônio Molina, thus, ahead of BRF Brasil Foods’ (the company that resulted from the recent merging of Perdigão and Sadia) sales in the same year.
With the addition of Keystone Foods to its string of companies, many acquired over the last three years in Brazil and abroad, Marfrig comprises now 38 companies, totaling 151 units and 85,000 employees in 22 countries. One of the jewels of the crown is Seara, a Brazilian leading chicken and pork processing company, which was acquired from Cargill, last year.
According to sources in the sector, the proximity to McDonald's has, no doubt, favored Marfrig in the closing of the acquisition of Keystone Foods. Two years ago, after the acquisition of OSI, Marfrig became the biggest supplier to McDonald’s restaurants in Brazil, USA and Europe.
Ironically, though, it is exactly the relationship between the Brazilian and the American companies that emerged as a big concern for the Brazilian financial annalists, as McDonald’s responds for 90% of Keystone’s sales. During the recent press teleconference on the recent acquisition, Marfrig’s CEO, Marcos Antônio Molina, minimized the concern of the annalists, saying that the relationship between the companies is very solid.
Marfrig has plans to keep on growing in the stream of the fast food business expansion around the world. Like any other supplier to gigantic corporations, Marfrig may well expect hard times in the long run, especially when contracts and prices have to be negotiated. When recently questioned on the criteria that Keystone uses to adjust the price of the products sold to McDonald's, Molina said the price list is periodically reviewed "to secure that the relationship is profitable and stable for all of us.”