Dawn Meats is to take a 49% stake in Elivia, the second largest beef processor in France. It is understood that the deal may be worth in the region of €40m.

This will see the French beef processor, which is owned by one of the largest farmer-owned co-operatives in France, Terrena, give up 49% to the privately held Irish company, owned by the Browne and Queally families. Dawn Meats has an option to increase its stake to 70% by 2019.

Terrena, controlled by 22,000 shareholder farmers, had total group sales of €4.7bn in 2013. Elivia currently has 2,600 employees and had sales of €1bn in the last year. However, it has been struggling in the last number of years, with losses of €8m in 2012.

Beef consumption in France has been declining steadily as consumers move toward cheaper protein products like poultry and pork.

The two companies’ beef businesses are similar in size and are complementary in their respective markets. Elivia slaughters in excess of 500,000 head of cattle per year from three sites in France.

The company sells approximately 180,000 tonnes of beef and exports approximately 40,000 tonnes to Europe, north Africa, the Middle East, and Asia – and in the past Russia.

Backed by Ter’elevage, an organisation of producers belonging to Terrena, the cooperative is the number one cattle supplier in France, with over 300,000 animals sold in 2012.

As part of the deal, Terrena will invest €100m over the next three years to modernise Elivia’s production facilities. The agreement will be submitted to the anti-trust authorities in the first quarter of 2015. Elivia will continue to be managed by its current chief executive, Guy Wermeister.

As the majority of Elivia’s sales are in its home market, this deal will provide greater export market opportunities. It also gives Dawn direct on-the-ground access to a market with 66 million people while building scale.

It will effectively double the size of Dawn’s business. Niall Browne, CEO of Dawn Meats, said that “scale is a prerequisite to compete effectively in international markets, where efficiency is essential”.