November 24, 2014

Brazil's JBS acquires Primo Smallgoods and Big Frango

  

Brazil's JBS SA announced its acquisition of the Australian beef and pork processor Primo Smallgoods and the third-biggest fresh chicken producer in Brazil, Big Frango, a Reuters report said.

JBS, the world's largest meat group, said that its US$1.25-billion purchase of Primo Smallgoods would increase its presence in Asia.

The company intends to increase sales in South Korea, Singapore, Hong Kong and China, where it is already the biggest meat supplier, chief executive officer Wesley Batista said. Batista said earlier this month that the company's exports of meat products from its Australian unit to China were growing. China and Australia signed a free trade agreement this month.

"Acquisitions have been a tremendous strategy for JBS," Batista said. "The main benefit of this operation is probably to serve the Asian market."

Primo Smallgoods is a leading producer of ham, sausage and bacon in Australia and New Zealand, with five plants, seven distribution centres and 30 stores.

JBS expects to benefit from US$26 million in cost savings from the deal and earn a revenue of US$870 million from it in 2015. The purchase still needs approval of Australian regulators.

The company also announced that it was buying AMSE02 Participações, which controls Grupo Big Frango in southern Brazil, for US$165 million. The purchase is subject to approval by Brazil's anti-trust regulatory body, CADE. Big Frango has a processing capacity of 460,000 birds per day in two processing facilities and annual sales in excess of US$390 million. Big Frango is already approved to export poultry products to the European Union, China and Japan.

JBS had reported a five-fold increase in third-quarter net income year on year and forecast a 22% rise in net revenue for 2014.