Thursday, May 19, 2016

JBS International can be a catalyst for agreement between Tyson and BRF

The announcement of the creation of the JBS Foods International may be the "catalyst" for a deal between Tyson Foods, the largest u.s. meat company, and brazilian BRF, assessed today Brazil Bank. Last week, revealed that Tyson executives visited factories of the BRF in Brazil. The approach occurs at a time when Tyson decided to return to invest abroad, potentially in the areas of chicken and processed foods. Tyson''s interest in BRF, inclusive, would be the justification for the amendment to the clause of '' poison pill '' of brazilian company, according to a source close to the BRF said to the value.
Also last week, the JBS has proposed a corporate restructuring from the active responsible transfer of about 80% of their revenue to a new company (JBS Foods International) based in Ireland; and with shares listed on the New York Stock Exchange (NYSE).
The evaluation of Kapulskis, Brazil''s Thiago analyst Plural, the JBS movement can be the "trigger" for the Tyson continue so proactive in dealings with "" the BRF. One of the reasons for this is that, which is listed on the New York Stock Exchange, JBS would compete for the same investors that Tyson, who is listed on the same stock exchange.
In the midst of a dispute that promises to be "head-to-head"; for the lead; global; — JBS is the largest meat company on the planet; —, the BRF could be the missing piece to complete the industrial park of Tyson in the world, as the Plural Brazil.
"The synergies between BRF and Tyson look strong," pointed out the Bank analyst, in a report. For Brazil, the two companies;;; complement each other geographically and would not have "overlays". For Tyson, the BRF would give access to the Middle East and Europe. Remember those regions Bank, BRF made acquisitions in; food distribution area in recent years.
In addition, the marks of the BRF in Latin America (in Brazil, the company is the owner of the two leading brands, Sadia and Perdigao) could add value to Tyson, evaluates the Plural Brazil.
But that''s not all. According to the Bank''s analyst, BRF can increase the profitability of Tyson, considering that the brazilian company has better margins and; higher return on invested capital (ROIC, the acronym in English) than the American company. In this sense, Tyson could get better return with investment in BRF than in other internal projects.
For the Plural, Brazil the current low cycle of the chicken industry in Brazil — with high corn prices, prices of chicken meat exports and recession in the country — can be positive for Tyson to invest, to the extent that the acquisition could be cheaper than it would be in the high cycle.
Financially, the Bank assesses that Tyson has condition to acquire a participation that allows "control" the BRF — a piece next to 33.33%, trigger that triggers the new '' poison pill '' of BRF. Buy 100% of the BRF,; However, it would be more "challenging", given the level of indebtedness that Tyson would reach in this situation.
"Our calculations show that it''s challenging to acquire 100% of Tyson BRF because she would have to add the net debt of the company, but it would be easier to digest a controlling slice", considers the Plural Brazil. The Bank''s projections, the leverage ratio (ratio of net debt and Ebitda) would rise to 1.74 times to 2.83 times if Tyson bought a slice of 33.3% of the shares of the BRF, paying a premium of 50% for the roles. If you bought 100% of the shares, the company''s American leverage index jump for 5 times.
To the current shareholders of the BRF, evaluated the Brazil Plural, the best scenario would be the acquisition of 100% of the shares by Tyson. In the case of the American company stop just participation "SP", there is the chance of conflicts of interest.
On the other hand, added the Bank, have a slice "SP" in BRF could be positive, if it meant the total or partial reduction of pressure that pension funds can exert on the stock prices of the brazilian company.
In view of the Plural Brazil, pension funds need to sell shares of BRF for "reasons of liquidity". Currently, Petros and Predicted has about 10% of the shares BRF each. The private equity fund Tarpon also has a slice; similar.
Fonte: Valor Economico - 18/05/2016
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