September 18, 2016

Brazil’s BRF Foods has reached an agreement with Malaysian agricultural and food group, FFM Berhad, to acquire a 70 percent stake in FFM Further Processing (FFP), a subsidiary of FFM Berhad, for $16 million.

FFM Berhad is itself part of the larger PPB Group Berhad, a Malaysia-based conglomerate with business activities in grains, agribusiness and consumer products in Southeast Asia. FFP has a monthly output of 250 tons of frozen sausages, burgers, chicken nuggets, and vegetarian foods which are sold in Malaysia under the Marina and Seri Murni brands.

The investment is part of BRF’s strategic growth plan to expand its presence in the halal meat markets in Southeast Asia and the Middle East, according to Global Meat News – a fact that was echoed in a company statement announcing the deal that noted that the investment was “in line with the BRF’s strategy to enhance its presence in Southeast Asia and its continued commitment to strengthen its focus in Muslim markets.”

The deal also follows closely upon BRF’s announcement in July of this year that it was launching Sadia Halal, a dedicated subsidiary for the production, distribution and sale of products to Muslim consumers, the opening of an office in Kuala Lumpur, and the April acquisition of Oman-based frozen food distributor, Al Khan Foodstuff.

Global Expansion

The Brazilian market accounted for slightly more than half of BRF’s revenue in 2014. However, due to the challenges that Brazil has been facing, including unemployment, a drop in sales, currency issues, and the resulting contraction of its economy, the group has developed a plan of overseas expansion.

In December 2015, the group announced it had completed three separate acquisitions on three continents at a total cost of $496 million. These included the purchase of Thai poultry processing company, Golden Foods Siam Ltd., from Navis Capital, a Malaysian private equity firm, for $360 million, the purchase of Eclipse Holding Cooperatief UA, which controls pork operations in Argentina, for $85 million, and the purchase of the UK-based food distributor, Universal Meats for $51 million.

The group also acquired a 49 percent stake in a joint venture in Singapore last year for an investment of $19 million that will lease two meat processing plants and a distribution center in the country, and also acquired brands of sausage, hamburgers, and margarine from Molinos Rio de la Plata at a cost of $43.5 million.

BRF profits for the second quarter of 2016 fell by 24 percent, according to Global Meat News to R$1.9 billion (US$577 million) compared to the same quarter a year before, with the decrease being partially attributed to the group’s rapid expansion.

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Lynda Kiernan