June 15, 2010

Marfrig acquires Keystone Foods

Marfrig Alimentos SA, Latin America's second-largest beef producer, agreed to pay US$1.26 billion for Keystone Foods LLC, the world's first company to mass produce boneless chicken nuggets.

Marfrig signed an agreement with Lindsay Goldberg LCC to buy all the shares in closely held West Conshohocken, Pennsylvania-based Keystone, the Sao Paulo-based company said yesterday in a regulatory filing. The transaction is subject to regulatory approval, Marfrig said.

Buying Keystone gives Marfrig access to a supplier to international food and restaurant companies such as McDonald's Corp. and Campbell Soup Co. Marfrig has sought to expand production through acquisitions in the past three years.

Earlier, Marfrig announced the agreed acquisition of Ballymena, Ireland-based O'Kane Poultry Ltd. for 26 million pounds ($38.3 million) on May 25. In January, it concluded the takeover of Seara Alimentos SA from Minneapolis-based Cargill for US$705.2 million.

Keystone produces more than 1.6 billion pounds of poultry products and 388 million pounds of beef products a year and distributes them to about 30,000 restaurants in 13 countries including the US, France, Australia, South Korea and Israel.

Marfrig plans to sell BRL2.5 billion (US$1.38 billion) of five-year convertible-local bonds to finance this acquisition and at the same time maintain the flexibility in its balance sheet. Current shareholders will have priority to buy the bonds.

Marfrig rose 0.3% to BRL16.85 earlier in Sao Paulo trading before the announcement. The shares have fallen 12% this year.