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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