Mexico-based dairy company Grupo Lala has struck a deal to buy Vigor Alimentos in a deal that values its Brazilian peer at just under BRL5.28bn (US$1.7bn).
Lala said yesterday (3 August) it would put forward the agreement, finalised with Vigor’s owners including Brazil-based meat giant JBS, to its own shareholders.
Lala said based on Vigor’s estimated EBITDA of BRL329m, the price agreed represented a multiple of 17.4 times.
Talks between Lala and Vigor’s investors, the largest of which is J&F Investimentos, the Batista family vehicle that controls JBS, emerged earlier this week.
Lala said yesterday “as a first step towards completing the transaction” it, J&F and JBS had entered into an agreement that will see the company acquire subject to certain terms and conditions, 91.99% of the shares of Vigor.
In addition, Lala may acquire another 8% stake in Vigor owned by European dairy giant Arla Foods.
The deal agreed does “contemplate” Lala will buy 100% of the shares in another dairy company in Brazil, the co-operative Itambé, in which Vigor owns a 50% stake. That part of the transaction is subject to the exercise of certain rights by Vigor’s partner in Itambé, Cooperativa Central dos Produtores Rurais de Minas Gerais Ltda.
In March, Brazilian business daily Valor Econômico claimed PepsiCo had made two bids for Vigor but no deal had been reached.
Vigor is one of Brazil’s largest dairy processors. The group has 14 production plants and 31 distribution centres in Brazil. It employs more than 7,600 staff. The company markets dairy products including yogurt and cheese under brands such as Vigor, Danubio and Faixa Azul.
In 2007, a majority stake in Vigor was sold to Brazilian meat processor Grupo Bertin. Two years later, Bertin sold a majority stake in itself to Brazilian meat giant JBS, another company controlled by J&F.
In 2012, JBS spun off Vigor, retaining a minority stake in the company.
In 2015, J&F announced plans to buy control of Vigor. Last year, Vigor was delisted.
Publicly-listed JBS, which is offloading assets to bolster its finances after a tumultuous 2017, said it would receive around BRL780m from the sale. The company said it would use part of the proceeds to further reduce its debt.