BRF SA, the largest Brazilian processed food company, announced plans to invest $20 million in China’s COFCO Meat Holdings Ltd., a subsidiary of COFCO Corp, through COFCO Meat’s planned initial public offering (IPO) for November 1 on the Hong Kong Stock Exchange.
Backed by U.S. private equity firm, KKR & Co., Boyu Capital, and Singapore state investment firm, Temasek Holdings, COFCO Meat is a vertically integrated pork business with operations along the entire value chain. With 47 pig farms, two abattoirs, and two meat processing facilities in China, COFCO Meat has a slaughter rate of 4.5 million hogs per year, producing 18,000 tons of meat. The business also raises 24 million chickens with a slaughter rate of 110 million birds per year according to Global Meat News.
One of the largest food companies in the world, BRF claims 35 facilities in Brazil, 16 overseas plants, and a total of 40 distribution centers through which its produces and sells foods under five brands to more than 120 countries.
A New Partnership
BRF and COFCO Corp have also reached a non-binding agreement for the mutual advancement and strengthening of both companies. Under the terms of the partnership, BRF will be able to have greater access to the Chinese market while also gaining more knowledge about China’s regulations regarding meat production. The two companies will also exchange expertise on best management and operation practices and will explore opportunities for future mutual investments and collaborations.
Global Growth
This tie-up with COFCO is the latest move by BRF, which has been pursuing growth through a string of global acquisitions. Since December 2015 the group has completed a series of deals including three acquisitions on December 1. These deals were for 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.
Moving into 2016 BRF went on to acquire Brazilian pork producer, Globosuinos for US$5.6 million, UK-based Universal Meat for US$49.5 million, and a 70 percent stake in Malaysia’s FFM Further Processing (FFP), a subsidiary of FFM Berhad, for $16 million.
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Lynda Kiernan