São Paulo – Brazilian poultry processing company BRF is about to expand its presence in the Middle East with a new investment in the region. On Monday (5th), the company signed a legally binding memorandum of understanding to buy part of the frozen products distribution business of the Qatar National Import and Export Co. (QNIE). The company has been the distributor of BRF’s products in the Gulf country for more than 40 years already.
When a memorandum of understanding is not binding, it outlines the deal’s preliminary terms and doesn’t set forth obligations for those involved until the deal carries on. In turn, when it’s legally binding, it generates obligations between the parts and reproduces the structures of the future contract.
According to a statement released by the Brazilian company to investors, the deal is estimated to be worth US$ 140 million. BRF said to ANBA that the deal has not yet been concluded and that it will only talk when the deal is done. The acquisition will be made under the Qatari law framework.
BRF said in a statement released to investors that the purchase is “in line with the strategic plan of globalization of the company, accessing local markets, strengthening BRF’s brands, distributing and expanding its portfolio of products around the globe”.
This is not BRF’s first investment in the region. Last year, it opened a plant in Abu Dhabi, capital of the United Arab Emirates. The plant will employ 1,400 people by 2017, when its output will reach 70,000 annual tons of marinade products, pizzas, breaded products and hamburgers. From this plant, the company plans to supply the markets of the Middle East and Asia.
In Oman, the company bought 40% of its partner in the country, responsible for the distribution of products by Sadia, one of its brands. BRF also made other investments in the region and acquired 75% of the frozen food retail distribution business Alyasra Food Company, its distributor in Kuwait.
In the balance sheet of Q2 of this year, released in July, the company presented increased sales in the region. Revenues from the Middle East and Africa reached R$ 1.8 billion (US$ 462 million), an increase of 29.3% over Q2 2014. The company attributed the growth of its revenues in the region to the fact that Q2 preceded the Ramadan, the holy month of Muslims, when food sales are strong.
The company reported “significant” growth in the United Arab Emirates and Oman, and said: “These growth rates are the result of the strategy chosen by the company in acquiring distributors in the region, which allowed BRF to advance in the value chain, being able to introduce new products, expand volumes, improve prices and have more control over retail”.
*Translated by Sérgio Kakitani
