Brazilian beef producer Marfrig plans to sell a stake in order to lower its mounting debts,in a move which is expected attract food companies as well as private equity firms.
The company has appointed Brazilian bank Banco Itaúto hold the bidding process and expects to raise about BRL2bn($989m)through the sale of its stake in the holding company or some of its divisions.
While the talks are at a preliminary stage,potential bidders could include US food company Tyson Foods,US private equity firm Blackstone,private equity units of American multinational banking company JPMorgan,and Brazilian banking company Banco Bradesco,reported Bloomberg citing sources with direct knowledge of the matter.
Marfrig Alimentos is seeking to lower its debt of BRL8.72bn($4.29bn),after making about 20 acquisitions over a five-year period,in order compete with its rival BRF-Brasil Foods.
In a major acquisition,the company invested$2bn to acquire Brazilian poultry and pork business Seara from Cargill and Keystone Foods in 2010,which caused its debt to increase fourfold within two years.
To lower its debt,Marfrig completed the divestment of US and European distribution unit to US distributor Martin-Brower for$400m in February 2012.
In June 13 2012,Marfrig vice president of institutional affairs Joao Sampaio noted that the company was planning to divest its assets as well as its stake in Seara to lower its debt from the current 4.5 times the earnings to 2.5 times.
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