December 28, 2015

Saudi Agriculture and Livestock Co. (SALIC) announced it has agreed to acquire a 20% stake in Brazilian beef exporter, Minerva, for US$188.4 million, representing a sale price of $15.60 per share, according to Reuters. The deal is part of a capital raise approved by the Minerva board that could see the sale of as many as 99.7 million shares worth up to US$396 million. The company plans to use the raised funds to reduce its debt and to finance capital expenditure plans.

Although Brazil has seen beef consumption fall by 10% this year as consumers opt for less expensive chicken and pork amid an economic slowdown, the lower Brazilian real has resulted in higher exports for Brazilian meat companies.

“The Middle East market is one of the regions, after Southeast Asia, that is growing at a consistent rate in terms of meat consumption,” Minerva Chief Executive Officer Fernando Queiroz said Wednesday on a conference call with analysts and investors, reports Bloomberg.

However, despite these increased exports, Minerva’s debt, which is mainly in foreign currency has nearly doubled according to Reuters, with the weakening of the real against the U.S. dollar, leading to the decision for the capital raise.

SALIC was launched three years ago with the goal of improving Saudi food security through expanded investment in agriculture and livestock across varied global geographies. The firm focuses on investments in beef and eight key crops including corn, soybeans, wheat and barley. The acquisition of the Minerva stake comes after SALIC’s partnering with U.S. grain trader, Bunge in April to form G3, which bought a controlling 50.1% stake in the Canadian grain handler, CWB, for C$250 million (US$180 million), in order to gain control of Canadian grain exports.