Marfrig has said the sale of its domestic poultry business will make the Brazil-based meat group “stronger” and allow it to focus on growth opportunities elsewhere.
Marfrig has decided to offload its Seara Brasil unit to local rival JBS. Seara Brasil, which sells poultry and processed food products, accounts for 30% of Marfrig’s sales. The company has agreed to sell the business in exchange for JBS assuming a portion of its debt.
Marfrig has faced questions over its indebtedness and, speaking to analysts after the deal was announced, senior executive Sergio Rial said the deal would boost the business and allow it to concentrate on building the other parts of the company.
“This deal allows us a couple of things. We would de-leverage the group [and] that basically means the capability to grow in the years to come – but now [with] more focus,” Rial, the head of Seara Foods, which includes Seara Brasil and others, said.
If the sale of Seara Brasil is approved by Brazilian competition authorities, Marfrig will be offloading its branded business in its domestic market. It would be left with its beef operations in Brazil, as well as its European arm – the UK-based Moy Park – and US meat products manufacturer Keystone Foods.
Rial said Marfrig would look to “accelerate” the growth of its Keystone business in Asia, which supplies major fast-food chains.
“We will get a lot more visibility to the potential of the Keystone Asia platform in particular, where the business has grown 14-15% annually over the last ten years. Asia’s going to be a very important piece of our growth,” he said.
Rial said Marfrig would to be “selective” in Europe. “Lots of things are happening in Europe. Consolidation is in the making. Moy Park is one of the largest food companies in that continent, selling over US$2bn, with steady margins and solid management,” he said.
“We felt it was very critical to establish a stronger footing on our capital structure to have sustainable growth going forward. We remain pretty optimistic.”