December 3, 2015

Brazil’s largest processed food company, BRF SA, has completed three separate acquisitions on three continents at a total cost of $496 million, according to reports by Bloomberg. The company announced the three acquisitions on December 1. They include 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, Bloomberg reports.

All three acquisitions, will be funded by cash on hand and debt, according to BRF chief executive officer, Pedro Faria.

Mr. Faria told journalists on a conference call on December 2 that the company expects its three latest acquisitions to add approximately $600 million in annual revenue to its balance sheet, along with an increase in production capacity of 230,000 tons and an increase in sales of 6%, while doubling the group’s overseas output to 8% of the group’s total production, according to Bloomberg.

Brazil 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’s earnings before interest and taxes dropped by 45% in the third quarter compared to the third quarter a year before. This caused shares to fall to their lowest in more than a year and sparked concern among investors. In response to Brazil’s economic situation, BRF has developed a plan of overseas expansion, seeing it spread its presence over the past two years into Kuwait, Indonesia, Singapore, and the UK.

These three deals are only the latest in a string of global acquisitions that BRF has pursued as it works to grow into a global food supplier, following other Brazilian companies such as JBS SA and Vale SA. As part of BRF’s ongoing plan of expansion, earlier this year the group acquired a 49% stake in a joint venture in Singapore for an investment of $19 million that will lease two meat processing plants and a distribution center in the country, while more recently in October, the group announced it was acquiring brands of sausage, hamburgers, and margarine from Molinos Rio de la Plata at a cost of $43.5 million, according to Reuters.

The purchase of Cooperateif UA in Argentina will make BRF the second largest pork producer in the country, according to Mr. Faria reports Bloomberg, and the company foresees a promising future in the country with the election of pro-business president-elect, Mauricio Macri, who will be taking office on December 10.