São Paulo – The Brazilian JBS, which is already the largest beef sector company in the world, promises to become "the largest multi-protein company in the world," with great operation in the areas of poultry, dairy, leather and animal feed. Yesterday (16), the group announced two great steps in this direction: the establishment of an association agreement with Bertin, another large Brazilian slaughterhouse, and North American company Pilgrim’s Pride, which produces chicken.
According to a JBS and Bertin press statement, the agreement signed "forecasts, among other activities, several transactions for unification of operations" of both companies, i.e., a merger. For such, a holding will be created to control both groups. The controlling shareholders of JBS should transfer their shares to the new company, whereas Bertin should transfer 73.1% of its capital.
To make possible the business, both groups are awaiting the conclusion of a process for capitalization of JBS USA, a subsidiary of the Brazilian company in the United States, which plans to raise US$ 2.5 billion. According to the press statement, the execution of the agreement "is subject to this investment in JBS USA, aiming at maintaining JBS’ leverage at the current levels".
The statement also shows that Bertin group is one of the main producers of items of animal origin in Latin America, like beef, dairy, leather and animal feed. The company also has a cosmetics division and hygiene products that are not part of the agreement.
The company has 38 production units in Brazil and abroad with a slaughter capacity of 16,500 heads of cattle a day. The company employs 28,000 people and, last year, had revenues of 7.5 billion Brazilian reals (US$ 4.2 billion).
JBS, in turn, has a capacity to slaughter 73,900 heads of cattle a day. The company has 25 factories in Brazil, six in Argentina, 16 in the United States, 10 in Australia and eight in Italy. Last year, revenues totalled 30.3 billion reals (US$ 17 billion).
According to figures disclosed by newspaper Valor Econômico, if the merger is consolidated, the group should become the third main Brazilian company in terms of revenues, losing only to oil company Petrobras and mining giant Vale.
American chicken
In the other operation announced yesterday, JBS informed the purchase of 64% of the capital of Pilgrim’s Pride, a company that breeds, slaughters and sells chicken, and is headquartered in Texas. The North-American company, according to a JBS press statement, is living a process of judicial recovery and the transaction is in accordance with the reorganisation plan submitted to the court that is managing the case.
According to JBS, Pilgrim’s Pride was evaluated at US$ 2.8 billion for the deal. The Brazilian group informed that it is going to count on a line of credit to cover US$ 1.5 billion in debts by the Texan company and hopes for the transaction to be completed by December this year.
Always according to JBS, Pilgrim’s Pride has 33 industrial units in the Untied States, three in Mexico and one in Puerto Rico. It is one of the main companies in the sector in the United States, employing 41,000 people and with a capacity for the processing of 4.1 million tonnes of chicken a year. In 2008, the company had revenues of US$ 8.5 billion.
The JBS press statements show that both operations are subject to the approval of competition defence organisations in Brazil and abroad. In the case of Pilgrim’s Pride, the deal needs ratification by the Judiciary.
*Translated by Mark Ament