Brazil Meatpacker Marfrig Sees End Of Acquisition Period

Brazilian meatpacker Marfrig Frigorificos e Comercio de Alimentos Ltda. (MRFG3.BR) has ended a long period of acquisitions with this week's deal to buy U.S.-based Keystone Foods Corp., according to Marfrig Chief Executive Marcos Antonio Molina dos Santos.

Earlier this week, Marfrig signed an agreement to acquire Keystone Foods for $1.26 billion.

The deal came less than one month after Marfrig acquired full control of O'Kane Poultry Ltd. of Northern Ireland, for some $37.2 million.

In January, Marfrig completed the acquisition of Seara Alimentos, a local poultry, pork and consumer food company that had been controlled by Cargill Inc., for around $899 million.

"The season of acquisitions is over. I can't dilute Marfrig's capital any more. I will focus on the integration of recent acquisitions for the next five years," said Santos in a conference call with analysts.

The company's capital has been diluted by virtue of the fact that recent acquisitions were financed through equity operations.

Marfrig financed the acquisition of Seara with a primary share offer on the BMFBovespa stock exchange at the end of 2009 totaling 1.5 billion Brazilian reals ($835 million).

Keystone will be financed via a convertible debentures issue worth BRL2.5 billion.

Marfrig's top executive highlighted the fact that the Keystone acquisition will reinforce the company's partnership with McDonald's Corp. (MCD).

"It is important to note that we were already a supplier for McDonald's Corp. in Brazil and, with the Keystone acquisition, we will expand this relationship across the globe," said Santos.

Keystone Foods, the largest privately held meat products company in the U.S., serves more than 28,000 restaurants in 13 different countries, including the U.S, Europe and Asia. In 2009, the company operated with 12,900 employees in 54 units, and had net revenue of $6.4 billion from its food production and distribution businesses.

With this week's acquisition, Marfrig became a lead supplier to McDonald's, Campbell Soup Co. (CPB), Subway, ConAgra Foods Inc. (CAG), Yum Brands Inc. (YUM) and Chipotle Mexican Grill Inc. (CMG).

The conclusion of the transaction is subject to customary conditions applicable to similar transactions, including approval by antitrust authorities, according to Marfrig.

-By Rogerio Jelmayer, Dow Jones Newswires; 55-11-3544-7071; rogerio.jelmayer@dowjones.com

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