February 27, 2008

 

Brazil's PCP buys US$100 million stake in Argentine grain company

 

 

Argentina's leading agricultural production company, Grupo Los Grobo SA, has sold a minority equity stake to Brazilian Investimento em Participacoes PCP for US$100 million, local daily Clarin reported Tuesday (February 26, 2008).

 

The move follows the company's first bond issue late last year and talk of an initial public offering. On Oct. 25, Los Grobo issued a US$20 million bond. The proceeds from the issue will be used to refinance company debt and to fund the company's expansion through partnerships with some local peers, Andrea Grobocopatel, an executive director and member of the company's founding family said in a recent interview with Dow Jones Newswires.

 

"We did a good job in issuing our first bond, now we have to be ready for the (stock) market," Grobocopatel said.

 

"I think all companies have to be ready for an IPO, it's the way towards more efficiency and transparency," she said, declining to confirm whether the company is actively preparing an IPO.

 

Los Grobo manages 100,000 hectares of planted crops and harvests around 1 million tonnes of grain and oilseeds, generating annual sales of more than US$150 million.

 

The company owns and cultivates nearly 20,000 hectares and plants the remaining amount on leased lands. It also operates a flour mill in Bahia Blanca.

 

Soy makes up the largest share of the company's production at 40 percent, followed by wheat at 30 percent, with sunseed and corn constituting the remainder.

 

The Brazilian investment in grain production follows a wave of purchases by Brazilian meat packers of Argentine processing facilities.

 

In October, Argentina's Quickfood SA received a bid for 70 percent of its share capital from Brazil's Marfrig Frigorificos e Comercio de Alimentos Ltda (MRFG3.BR). Marfrig acquired the stake in November.

 

Swift, Argentina's largest beef exporter, was recently bought by Brazil's Grupo Friboi, owned by JBS SA (JBSS3.BR). JBS is now the world's largest beef company following the purchase of US Swift & Co. last year for US$1.4 billion.