JBS S.A. and Marfrig Alimentos S.A. have reported an agreement in which JBS will acquire the Seara Brasil business of Marfrig, which includes chicken, pork and meat processing.
The acquisition also includes Marfrig's Zenda leather business in Uruguay, according to the June 10 announcement.
The deal, which will be in the form of the assumption of Marfrig debt, is valued at 5.85 billion reals ($2.75 billion).
JBS and Marfrig are both headquartered in Sao Paulo, Brazil.
By deleveraging, Marfrig said it will be able to rebalance its capital structure, concentrate on its Brazilian beef business, redirect its foodservice strategy and speed up growth of its export platform. Marfrig will be a much smaller company, as Seara accounted for 30% of total Marfrig revenues.
JBS said the deal enables it to add brands and expand its meat processing business.
Seara is a major chicken, pork and packaged meat brand in Brazil. Marfrig acquired the company from Cargill Inc. three years ago (Feedstuffs, Jan. 16, 2010).
The acquisition has been approved by the boards of directors of the two companies and remains subject to approval by JBS shareholders and regulatory review, the announcement said.
Meanwhile, Moody's Investors Service Inc. said it was placing certain JBS long-term credit ratings under review because of the impact the acquisition will have on the company's cash flow and leverage. Moody's said the review will also assess JBS's "appetite for further acquisitions."
The acquisition will make JBS the leading beef, chicken and leather producer in the world and a major lamb producer.
In the U.S., JBS is the third-largest beef and pork processor and, through its 75% ownership in Pilgrim's Pride Corp., the second-largest chicken producer.
JBS has markets in more than 100 countries and reported 2012 sales of 75.5 billion reals ($35.5 billion).