JBS S.A. explains rationale behind Bertin deal
September 16, 2009
by Bryan Salvage
SÃO PAULO, BRAZIL — After several weeks of rumors circulating in the media about an impending JBS S.A. acquisition of Pilgrim’s Pride, JBS announced on Sept. 16 it was set to acquire a majority stake in Pilgrim’s Pride Corp. through its U.S. subsidiary JBS USA Holdings Inc.
While industry was still catching its collective breath on this news, JBS announced shortly afterwards that controlling shareholders of Brazilian rival Bertin S.A. and JBS would contribute to a new holding company with their stakes being 73% and 51%, respectively. JBS added it is estimated the respective equity value of Bertin and JBS should be in a proportion of approximately 40%-60%, respectively, and that estimated synergies would be R$500 million (US$276 million) a year.
Once the Pilgrim’s Pride and Bertin deals are finally approved, JBS S.A. boasts the deals will make it "the largest multi-protein company in the world."
JBS explained the strategic rationale for the Bertin association is:
- Diversification into new segments with significant presence in the dairy industry.
- Creation of the largest leather processing company.
- Potential gains of scale, with estimated synergies of R$ 500 million (US$276 million) a year.
- Expansion of distribution channels (Retail and Food Service)
- Optimization of the industrial assets due to its geographic synergies.
"Bertin has presented a track record of success and growth since its beginning in 1977," JBS said in a news release. Established in 1977, Bertin operates 38 production units and employs 28,000 people. It operates in the beef, dairy, leather and pet product segments with several nationwide well-known brands — Bertin, Vigor, Leco and Danúbio.
Operating units in Brazil, Uruguay, Paraguay and China, Bertin exports products to more than 110 countries. Its production capacity (based on 2009 JBS S.A. estimates) is 16,450 head of cattle a day.