Marfrig CFO: Keystone sale to occur soon

Marfrig Global Foods’ sale of its Keystone Foods subsidiary should take place soon, the company’s global chief financial officer (CFO) said.

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PhotoShopAustralia, Bigstock
PhotoShopAustralia, Bigstock

Marfrig Global Foods’ sale of its Keystone Foods subsidiary should occur soon, the company’s global chief financial officer (CFO) said.

During Marfrig’s quarterly earnings call, held on August 15, the company addressed the divestiture of Keystone Foods, the 10th largest broiler company in the United States. Marfrig previously revealed it would sell Keystone Foods.

 “We absolutely cannot comment on rumors, and we cannot comment on anything related to a negotiation of, say, of a company and so forth,” Marfrig’s global CFO, Eduardo Miron, said.

“But I can tell you … we are very focused, and we believe that we are going to be able to move this process to end soon.”

Marfrig Global Foods is headquartered in Brazil, while the subsidiary Keystone Foods is headquartered in Alabama.

Communications with Tyson Foods

In a previous notice to the market, Marfrig stated that five companies were in talks to acquire Keystone Foods. Tyson Foods, George’s, Cargill – all based in the United States – and Chinese companies Cofco Corp. and China Investment Corp., were identified in a Reuters article.

Since that time, most of the media focus has been on Tyson Foods. In a notice to the market on July 31, Marfrig addressed one media report and stated, “although negotiations have begun with Tyson Foods, until the present moment, no binding agreement for a deal has been signed and no time frame for concluding the negotiations has been established.”

In an August 6 conference call, Tyson Foods CEO Tom Hayes was asked about Tyson’s possible acquisition of Keystone Foods, to which he responded: “What you should take away is we are always going to focus on those things that will bring value to our shareholders. What we talk about consistently is that buying new brands, certainly buying capabilities the company doesn’t possess today, that we can take advantage of growth areas, and then also, getting into new geographies, whether it's in the U.S. or abroad. When you think about the areas that we are to be focused on, that should give you the insight in terms of what our strategy will be for acquisitions.”

Reuters and Bloomberg have both reported that sources close to the situation said Marfrig’s controlling shareholder, Marcos Molina, agreed the previous day to sell Keystone Foods for $2.5 billion. However, neither Tyson nor Marfrig would confirm that.

Should Tyson acquire Keystone Foods, it would further solidify Tyson Foods’ position as the largest broiler company in the United States. According to the WATTAgNet Top Poultry Companies Database, Tyson produced 174.8 million pounds of ready-to-cook chicken on a weekly basis in 2017. Keystone, the 10th largest broiler company in the U.S., processed 23.8 million pounds of ready-to-cook chicken on a weekly basis in 2017.

According to the 2017 figures, Tyson processed 20.6 million more pounds of ready-to-cook chicken weekly than its closest competitor, Pilgrim’s Pride. The addition of Keystone Foods would extend Tyson’s lead to 44.4 million pounds per week, based off of 2017 statistics.

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