Brazil's JBS SA, the world's largest meat producer, will announce the purchase of Brazilian poultry producer Seara, a unit of Marfrig Alimentos SA , in the coming days, a source with knowledge of the operation said on Saturday.
"All I can say is that the deal was done," the source said without providing additional details.
The source was unable to say if the purchase is of Marfrig's Seara Brasil unit, or of the larger Seara Foods division. In addition to Seara Brasil, Seara Foods also controls Moy Park and Keystone, meat packers based in the United States.
Calls to JBS's press office were not answered on Saturday outside of normal business hours.
Sales at Seara Brasil, Seara Foods' largest unit, jumped 48 percent in the first quarter of 2013 to 2.05 billion reais ($962 million) and was responsible for about 30 percent of Marfrig's total revenue.
Marfrig shares have lost 12 percent of their value this year on concern that the company may not be able to reduce its high level of debt.
Marfrig, which had 13 billion reais ($6.1 billion) of debt at the end of 2012, is trying to cut that total by 2 billion reais by the end of this year. Much of the debt was accumulated as Marfrig bought smaller rivals in an attempt to compete with Brazilian meat-packing giants such as JBS as the Brazilian and international food processing industry consolidated.
To slash debt the company is working to cut costs, closing underperforming operations and putting assets up for sale, Sergio Rial, president of Seara Brasil, said on May 14. Rial is slated to become president of Marfrig in 2014.
In April, Cade, Brazil's anti-trust regulator approved JBS's purchase of Brazil's Bertin, and 11 smaller meat packers but said it would monitor JBS's position in the Brazilian beef market.
The JBS purchase of Seara may not raise the same concerns at Cade because Seara's main products are poultry and pork.
JBS's first entry into Brazil's poultry market was in May 2012 when it leased assets owned by Frangosul. The Frangosul transaction, though, is primarily aimed at the export market. JBS has poultry operations in the United States through its Pilgrim's Pride brand.
The purchase, if approved, will make JBS a major player in the Brazilian poultry market and put it in direct competition with BRF SA, the biggest producer and exporter of poultry in the country.
