Leucadia National Corp., a New York-based holding company, which acquired ownership interest in National Beef in 2011 and now ow n79 percent interest in the company, will retain 31 percent interest as a minority shareholder after the transaction is finalized. US Premium Beef, comprised of a group of 2,100 US-based cattle producers that founded the company in 1996, will retain 15 percent interest in National Beef along with a 3 percent interest held by other stockholders. According to the agreement, Leucadia and other investors cannot sell their shares in National Beef for at least five years. When the deal is concluded, Marfrig will be the world’s second-largest beef processor with combined sales of $13 billion.
With beef as one of Marfrig’s core business segments, the addition of National Beef solidifies its global position in the industry. It gives Marfrig additional access to National Beef’s 40 export markets, including Japan, where beef exports are currently banned.
“The acquisition of National Beef represents the realization of a unique opportunity,” said Martín Secco, CEO of Marfrig. “With the transaction, we will have operations in the world’s two largest beef markets, will gain access to extremely sophisticated consumer countries and will be able to grow while maintaining rigorous financial discipline.”
National Beef, which was founded in 1992, operates two slaughtering facilities in Kansas and is responsible for handling about 13 percent of the cattle slaughtering capacity in the US each year. It also operates three processing plants located in Hummels Wharf, Pennsylvania, Moultrie, Georgia, and St. Joseph, Missouri. After closing the deal, Marfrig plans to consolidate 100 percent of National Beef’s results, which will decrease its debt from 4.55 times its EBITDA to 3.35 times EBITDA.
National Beef CEO Tim Klein will remain with the company and a board of managers of National Beef will include nine members, of which five will be nominated by Marfrig, two by Leucadia and two by the other minority members.
According to Marfrig, “the transaction imputes an enterprise value to National Beef of US$ 2.3 billion, including debt.”
Marfrig also plans to sell its subsidiary, Keystone Foods.
“This sale together with the National Beef transaction, should help Marfrig to achieve its goal of reaching a leverage ratio of 2.5 times by the end of 2018,” according to the company.
"The acquisition of National Beef reflects our sustainable growth strategy," said Marcos Molina, chairman of the board of Marfrig Global Foods. "From now on, we have become the Brazilian company of the sector with the best financial health, proved into the lowest rates of leverage."