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 Brazil's meat processor Marfrig Frigoríficos e Comércio de Alimentos S/A announced Monday, June 23, that it is buying for US$ 680 million US-based OSI Group's poultry businesses in Brazil and the United Kingdom. OSI is McDonald's largest meat provider. The deal should be closed before the end of 2008.
In Europe, Marfrig will acquire OSI's Moy Park Group, consisting of the Moy Park Limited poultry business in Northern Ireland, England and France, as well as the vegetable and specialty bakery businesses of Kitchen Range Foods Limited in England and Albert van Zoonen B.V. in the Netherlands.
The OSI Group's Brazilian businesses that will be purchased by Marfrig consist of Braslo Produtos de Carnes Ltda., a beef and poultry processor, and poultry companies Penasul Alimentos Ltda. and Agrofrango Indústria e Comércio de Alimentos Ltda.
The total sales represented by the OSI Group's companies acquired are nearly US$ 2 billion. 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) which are listed on the São Paulo Stock Exchange (BOVESPA ticker: MRFG3) and with a potential additional payment in the future of up to US$ 220 million linked to future performance in the European businesses.
As a result of the transaction, OSI Group will be a significant shareholder in Marfrig. In addition, David McDonald, President and Chief Operating Officer of OSI, will join the Board of Directors of Marfrig.
McDonald will chair the strategic customer committee reporting to the Board of Directors. He will also be a member of the Moy Park Supervisory Board. The transactions are expected to be completed in the second half of 2008 after normal regulatory compliance.
According to a Marfrig press release, both Marfrig and OSI believe that there will be significant benefits arising from the transaction. Marfrig will expand its further processing capabilities in Brazil, while adding such capabilities in Europe.
The combined company will become one of the top ten poultry processors in the world. The Brazilian OSI operations will join the current Marfrig businesses in Brazil, while the European operations will constitute a new business group for Marfrig. In the new European business, Marfrig will offer a complimentary range of its food products.
David McDonald, President and COO of OSI welcomed the deal, which will see OSI, by virtue of its retained ownership in Marfrig, expand its sourcing platform in South America:
"Marfrig is the largest Beef processor in Uruguay and Argentina, the second largest in Brasil and the fourth worldwide. With the addition of the OSI Brazilian poultry operation the new company will now rank in the top five in Brazil.
"Marfrig also has a substantial pork operation in Brazil. This platform will enhance the OSI global procurement organization's ability to source a variety of proteins in providing the OSI group's customers in global QSR restaurant, retail grocery, and branded consumer foods with a global competitive advantage."
Marfrig is based in Santo André, in the Greater São Paulo, Brazil. It also has major operations in pork, lamb and poultry, supplying customers primarily in Latin American European and US markets. OSI Group, LLC is a global food processor headquartered in Aurora, Illinois USA.
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