Marfrig to buy Moy Park

Brazilian company Marfrig has announced it is to buy OSI Group's poultry businesses in Brazil and Moy Park in the UK.

Brazilian company Marfrig has announced it is to buy OSI Group's poultry businesses in Brazil and the UK.

Marfrig will acquire OSI's Moy Park Group, consisting of the vertically integrated Moy Park poultry business in Northern Ireland, England and France, as well as the value-added vegetable and speciality bakery businesses of Kitchen Range Foods in England and Albert van Zoonen BV in the Netherlands.

The Brazilian and European businesses being purchased are closely integrated in providing poultry supply chain solutions for European customers.

The OSI Group's Brazilian businesses that will be purchased by Marfrig consist of Braslo Produtos de Carnes, a value-added beef and poultry processor, as well as Penasul Alimentos, and Agrofrango Industria e Comércio de Alimentos, both vertically integrated poultry companies. The total sales represented by the OSI Group's companies acquired are nearly US$2bn. The deal is valued initially at US$680m, in a combination of cash and Marfrig common shares at market value, following completion of the transaction.

The transaction will make Marfrig a significant shareholder in the OSI Group. David McDonald, president and chief operating officer of OSI, will join the board of directors of Marfrig. McDonald will chair the strategic customer committee reporting to the board of directors. He will also be a member of the Moy Park supervisory board. The transactions are expected to be completed in the second half of 2008, following normal regulatory compliance.

Both Marfrig and OSI believe there will be significant benefits arising from the transaction. Marfrig will expand its further processing capabilities in Brazil, while adding such capabilities in Europe. The combined company will become one of the top 10 poultry processors in the world. The Brazilian OSI operations will join the current Marfrig businesses in Brazil, while the European operations will constitute a new business group for Marfrig.

David McDonald, president and COO of OSI, welcomed the deal, which will see OSI, by virtue of its retained ownership in Marfrig, expand its sourcing platform in South America: "Marfrig is the largest beef processor in Uruguay and Argentina, the second-largest in Brazil and the fourth worldwide. With the addition of the OSI Brazilian poultry operation, the new company will now rank in the top five in Brazil. Marfrig also has a substantial pork operation in Brazil. This platform will enhance the OSI global procurement organisation's ability to source a variety of proteins in providing the OSI group's customers in global QSR restaurant, retail grocery, and branded consumer foods with a global competitive advantage."

Marfrig is based in Santo André, São Paulo, Brazil. It also has major operations in pork, lamb and poultry, supplying customers primarily in Latin American European and US markets. OSI Group is a global food processor, headquartered in Aurora, Illinois, USA.