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In accordance with Article 157, Paragraph 4 of Federal Law 6,404/76 and with Instruction 358 issued by the Securities and Exchange Commission of Brazil on January 3, 2002 , MARFRIG ALIMENTOS S.A. hereby informs its shareholders and the market that it has executed a binding agreement to acquire the entire animal protein business (poultry, pork and prepared products) in Brazil of Cargill Inc. represented by Seara Alimentos Ltda. (currently Cargill Alimentos S.A.) and associated companies located in Europe and Asia, including the brand SEARA in Brazil and abroad, 12 plants in the value-added processed and prepared poultry and pork products segment and 1 port terminal, with annual revenue of approximately US$ 1.7 billion (one billion and seven hundred million U.S. dollars).The businesses to be acquired by Marfrig are:
* 7 poultry units with slaughter capacity of 1.2 million birds/day and 2 (two) pork units with slaughter capacity of 5,800 hogs/dayThe businesses in Brazil and abroad will be integrated with the other divisions of the Marfrig Group that have operations based on poultry, pork and prepared products, while capturing synergies with all the other divisions of Marfrig Alimentos S.A.
* 3 value-added prepared and processed products plants with production capacity of 17,500 tonnes/month
* 1 private port for meat and dry cargoes (Braskarne) located in Itajai, Santa Catarina
* the brand SEARA as well as the other brands used in this segment
* the distribution and trading operations located in the United Kingdom, Japan and Singapore, which hold export/import quotas from Brazil to several countries
* 9 animal feed plants located in the states of Santa Catarina, Paraná, São Paulo and Mato Grosso do Sul
* 6 poultry breeding units located in the states of Santa Catarina, Paraná, São Paulo and Mato Grosso do Sul with roughly 3,000 integrated poultry and pork producers
Marfrig stated its interest to Cargill at the same time it was doing a revision on Seara’s strategic plan. After evaluating the Marfrig´s proposal and considering current changes in the industry dynamic of animal protein in Brazil, Cargill realized that the combination between Marfrig and Seara would make more sense now and in the future. Cargill reiterated to Marfrig, however, that this sale does not change its commitment to continued growth in its business of beef, pork, chicken and eggs in various regions of 2 the world and will continue to explore opportunities for new investments in the industry globally.
The agreement is initially worth US$ 706.2 million in cash with the assumption of US$ 193.8 million in debt.
These amounts may be adjusted in the due diligence process until the effective conclusion of the transaction.
To assure the settlement of the operations described above, a long-term credit reserve was contracted with Bank Bradesco S.A. in the amount of R$ 1.3 billion.
The financing of the acquisition may involve a common stock offering by Marfrig through primary issuance of shares.
Following the conclusion of the transactions described above, the Company will inform its shareholders and the market if the events effectively fall under the scope of articles 247 and 256 of Federal Law 6,404/76. The Company will perform all legally required acts, in particular calling a Shareholders’ Meeting and making available all substantiating documents required by the transactions.
The transaction is expected to be concluded in the fourth quarter of 2009, following its submittal to the applicable regulatory agencies in Brazil and abroad and any other legally required acts.
Bradesco BBI was the exclusive advisor for Marfrig in the transaction.
Marfrig expects to obtain significant benefits from this transaction. The Company will expand its processed food capacity in Brazil, becoming the second-largest player in the domestic and export markets for poultry and pork and one of the largest in the world, while incorporating the SEARA brand in the added-value processed products market, which is of recognized importance in the Brazilian and international markets.
These investments reinforce Marfrig’s strategy to accelerate and diversify its industrialized products production in Brazil while expanding its direct access to international markets, accelerating its growth in a balanced and diversified manner, expanding its operating base with scale gains and even more competitive production costs in South America and serving its clients more efficiently and with greater coverage in the global market.
São Paulo, September 14, 2009
http://www.marfrig.com.br
