A 5.85 billion real ($2.73 billion) deal between JBS and Marfrig, agreed in early June, illustrated the contrasting fortunes of the two Brazilian meatpackers. Though nobody in Brazil’s beef sector has it easy, JBS had been growing and had ratings upgrades, while others have been lowered as they face debt challenges. Marfrig made a big step to clear up its debt burden with the sale of the Seara Alimentos poultry and pork unit to JBS, done entirely in assumed debt. The less-levered Marfrig will now focus on its beef operations. The debt assumed in the transaction included maturities from 2013 to 2017, and is split roughly evenly between dollars and reais.
JBS should nevertheless tread with care. It picked up quality assets that firmly established it in the white meats business, following a 200 million real purchase in May of pork and...
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