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Last week, Brazilian processing giants announced a deal that would transfer ownership of 16 Marfrig factories to rivals Minerva.
Both are major processors in South America and Marfrig owns National Foods, the fourth-largest beef processor in the US.
Prior to the deal, Marfrig had capacity to handle 11,000 cattle per day in Brazil, 1,400 per day in Argentina, 3,700 in Uruguay and 13,100 in the USA, where they have three factories that aren’t involved in the deal.
Minerva had 25 factory locations in South America, 11 of which are in Brazil with a total capacity of 29,500 head, and four factories in Australia, with daily capacity of 19,200 head.
Background
Minerva began as a Queiroz family business of cattle rearing and animal transport in 1957 and acquired its first processing factory in 1992.
Since then, the business has grown through acquisition and, in 2007, the company was listed on the Brazilian stock exchange.
The company had turnover in 2022 the equivalent of €5.8bn, with an adjusted EBITDA the equivalent of €585m and a net income of €124m.
The deal
Minerva has paid Marfrig BRL7.5bn (€1.4bn) for the large part of its beef processing capacity and the scale of the deal is such that it will increase Minerva’s revenue by 45% and is expected to generate positive cashflow from the outset.
Minerva describes the deal as “the most transformational for the company since the acquisition in 2017 of JBS plants in South America", which increased the company’s capacity by 35% and cost $300m.
The deal will make Minerva the second-largest beef processor in Brazil and will bring its cattle processing capacity to over 40,000 head per day.
Minerva doesn’t have a production location in Europe, although it maintains offices in England and Russia.
Marfrig has been previous owners of Moypark, although it sold this to Pilgrims Pride, where JBS is the main shareholder.
JBS has a significant presence in Europe - as well as Moy Park, its most recent acquisition was the meat and meals division of Kerry Foods.
So far, Minerva has focused on South America and more recently Australia for production acquisitions.
Irish farmers have been familiar with rationalisation in the Irish meat processing industry, but, so far, this has all been internal.
It has often been speculated that one of the Brazilian players would look to acquire one of the large Irish groups to establish a base in Europe and while there have been discussions and multiple rumours, they have never come to pass. However, it is still one to watch out for.
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