Blog: Dean BestCould Marfrig be eyeing M&A, disposals?

Dean Best | 26 March 2013

Marfrig, the Brazilian meat giant, has created a new senior position - and filled it with an executive with experience in M&A.

The company said today (26 March) it has appointed former Credit Suisse and Deutsche Bank executive Jaime Singer to a new role of vice president of strategic planning.

Singer will report directly to chairman and CEO Marcos Molina dos Santos. Marfrig said: "The hiring of the new vice-president represents yet another step forward in strengthening the strategic management of the company, which will result in an even more professional and correct corporate governance and further enhance the strategy of the Marfrig Group at the global level."

But could it also mean Marfrig steps up its M&A activity. Marfrig's last significant transaction was in 2011 when it swapped assets with local rival Brasil Foods, which embarked on the deal to clear the merger that created it.

In 2010, Marfrig made two deals in two months. In May that year, Marfrig's UK unit Moy Park bought Northern Irish processor O'Kane Poultry. A month later, Marfrig agreed a much bigger acquisition, when it struck a deal to buy US meat group Keystone Foods for US$1.26bn. And don't forget in 2009 Marfrig made a signifcant domestic deal when it bought Brazilian group Seara Alimentos from Cargill.

Marfrig has largely kept its powder dry since then. However, with demand for protein shooting up across emerging markets (including in its own backyard), Marfrig could look to M&A to boost its presence and grab a slice of that demand.

On the other side of the coin, Marfrig has itself reportedly attracted interest in the last six months. In August, Bloomberg said private-equity giant Blackstone and US meat giant Tyson Foods was mulling whether to buy a stake in Marfrig, although nothing came of it.

Marfrig has seen its debt grow in recent years and asset sales could be an option. In December, it sold BRL924m (US$460.8m) in shares, although this was less than expected.

In January, Marfrig brought in US$600m through a bond issue, which it said would "improve the long-term debt profile of the company".

The group reports its results for 2012 on Thursday. Perhaps the compacy will shed some light on its plans then. In any case, analysts will be watching.



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