November 21, 2014

The world’s biggest meat group, Brazil-based JBS, has acquired Australian meat supplier Primo Smallgoods for $1.25 billion in cash. Prior to the deal Australian played a minor role in JBS’ portfolio, being included within its U.S. division. Despite this, JBS claims leadership in Australian beef exports, with five feedlots with a capacity of 152,000 head of cattle, processing 6,000 hides per day, and lamb processing at 22,000 head per day. The deal, which will boost JBS’ revenues by approximately A$1.6 billion per year and will offer benefits of A$30 million per year in the elimination of redundant costs, is aligned with the group’s strategy to expand within branded meat which offers higher margins than commodity meat. The group is also making inroads into the poultry sector, announcing a secondary, smaller acquisition of Brazil’s AMSE02, which owns the chicken processor Big Franco Group which processes 460,000 chickens per day and posts revenues of R$1 billion per year. JBS has recently been more cautious about the amount of debt the group runs up as a result of acquisitions which has been reflected by Fitch Ratings upgrading the groups rating to BB from BB- last month.

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