Seara Brasil and Zenda, Marfrig's subsidiaries are sold to its rival JBS. JBS will now be the largest poultry company in the world, and second-largest food processor in Brazil, after the deal.
Chief executive of Marfrig, Sergio Rial disclosed that no banks brokered during the negotiation. As a result bof the sale, it will decrease his company's size to a third, cutting revenue to almost half leaving only $7.4 billion.
JBS' revenue on the other hand will now reach $4 billion. Pilgrim's Pride poultry brand is amongst its American operators. According to Wesley Batista, JBS's chief executive said "it is too soon to know if we will access the capital markets." JBS had the capacity to finance the operation in lieu of an issuance of a new debt or equity.
JBS 's shareholders' must still reach an agreement regarding the deal, despite approval from both companies. The Conselho Administrative de Defesa's permission is also required to seal the deal.
After the announcement, Marfrig's shares were up nearly 9 percent, while JBS's shares were down more than 7 percent. The market reaction is least likely to favor Marfrig over JBS. It is observed that Marifrig may have found a way to get rid of its debt, and no upfront gain as of the moment for JBS.
Join the Conversation