BRAZIL: Marfrig mulls IPOs of business units
Marfrig could list European arm Moy Park
Marfrig is considering listing parts of its business overseas, the chief executive of the Brazilian meat giant has revealed.
Sergio Rial said yesterday (10 March) the company could look at an IPO of units including European poultry group Moy Park.
"One of the things we are exploring - and I would like to reinforce it is exploring - is the possibility of taking our subsidiaries public abroad," Rial said. "It could be one [of the subsidiaries], two or none."
Speaking to investors after Marfrig reported its results for 2013, Rial said the company wanted to look at ways of "unlocking value" for shareholders and had seen "very strong activity" in stock markets abroad.
"The reason is very simple. We are going through a different cycle. There are significant pools of money leaving emerging markets and going back to mature markets. We are seeing a very strong activity in London and New York and also seeing the value of some of those companies not in line with Marfrig."
"Today we have an EV/EBITDA at 5.5 to 5.7 times. A straight beef company would be higher than six times. We are absolutely convinced Moy Park and Keystone would be valued significantly more than the share price today" he said. "We are not here to define what the share price would be - we are here to delilver performance - but at the same time figure out if there are ways to unlock additional value to Marfrig shareholders. This is not about a spin but absolutely the possibility and design of a potential listing.
The Marfrig boss said an IPO could happen this year, if market conditions allow.
"Could it happen in 2014? I don't know. We would certainly work towards that if we feel the market is there, which is not in our control." He added: "This does not in any way replace the need to focus on what we control."
Marfrig fell into the red in 2013, hit by foreign exchange, losses from derivatives and the cost of servicing its debts.
Marfrig booked a net loss of BRL816m (US$347.6m), which compared to a profit of BRL264m in 2012.
The company reported a 26% fall in EBITDA, which dropped to BRL1.38bn. Adjusted EBITDA, which excluded one-off items, was still down, sliding 4% to BRL1.45bn.
However, Rial insisted Marfrig was a "much more stable" company than in previous years.
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