Marfrig entered into a definitive contract with US-based Tyson Foods for the sale of its entire stake in Keystone Foods for US $2.4 billion, the Brazilian company announced on Monday, in a move to reduce its financial leverage and concentrate on meat operations of bovine.
The transaction includes the sale of all Keystone Foods’ assets, with the exception of a burger plant in North Baltimore, Ohio, with an annual capacity of 91,000 tons of processed product, one of the largest hamburger plants in the United States.
The plant has an annual income of US $300 million, Marfrig’s financial VP, Eduardo Miron, told Reuters in a telephone interview Sunday night.
Tyson will keep all the other operations of Keystone, which is a major supplier of chicken products to McDonald’s.
The decision to continue with the North Baltimore plant is in line with the strategy of the focus company with growth in cattle, including the recent acquisition by the majority holding company in the National Beef Packing Company, whose control was acquired by Marfrig in June 2018, “the company said in a relevant development, the Ohio plant will be added to the National Beef portfolio.
The total value of the business is approximately US $2.4 billion, which considers a capital value for Marfrig of US $1.4 billion after the settlement of the debt and other adjustments, said Marfrig.
The resources with the sale of Keystone will be used to significantly reduce the debt until the end of the year, Miron said. Marfrig expects the ratio between net debt and profit before interest, taxes, depreciation and amortization (Ebitda), a common indicator of operating profitability, to fall from 4.2 to 2.5 in December.
Miron defended the value of the business after criticism from analysts and the fall of 9.3% of the company’s shares this past Friday, the highest in almost three years, by the appreciation that the price would have been below what was coming being ventured by the media.
Miron said that Keystone more than doubled in value since it was acquired in 2010 by Marfrig for US $1.2 billion. In addition to the agreement with Tyson, Marfrig had already sold Keystone’s distribution network for US $400 million.
After the sale of Keystone and the acquisition of National Beef, Marfrig does not plan further mergers or acquisitions to expand its portfolio, Miron said. The company can grow organically but is not interested in acquiring beef assets that BRF will come to Argentina, he added.
The closing of the Keystone sale transaction for Tyson is subject to the approval of the regulatory bodies and the participation arm of the National Bank for Economic and Social Development (BNDES), BNDESPar.