SÃO PAULO--Brazilian food company BRF SA said Wednesday it
agreed to sell its dairy units to French giant Lactalis Groupe for
1.8 billion Brazilian reais ($805 million), in a move that will
make the European firm the second-largest dairy company in
Brazil.
Lactalis will buy the units through its Parmalat subsidiary, and
intends to use the Parmalat brand in Brazil, as it does in other
emerging markets, said Samuel Oliveira, a director at Indusval
& Partners bank which represented Lactalis in the deal.
"We are very engaged and intend to finalize the deal as soon as
possible, " he said. The French group believes there is plenty of
room to grow in Brazil, where use of dairy products is still
relatively low, he said. The firms on Wednesday signed a memorandum
of understanding until final documents are ready.
BRF said earlier this year that it wanted to sell its dairy
unit, and has been focusing on its meat businesses and
international expansion since Abilio Diniz was appointed chairman
in the first half of 2013.
"Since he came to the company, they have been focusing on higher
value-added products and eyeing their international expansion,"
said Sandra Peres, an analyst at Brazilian brokerage
Coinvalores.
Dairy represented close to 10% of BRF's net revenue of 30.5
billion reais in 2013. Brazil's total dairy market was worth 62
billion reais in 2013, from 56.2 billion reais the year before,
according to market research company Euromonitor.
Brazil is one the largest milk producers in the world and any
big dairy company needs to be present in the country, said
Indusval's Mr. Oliveira. Lactalis last year bought Brazilian
gourmet-cheese maker Balkis, which has units in the states of São
Paulo and Minas Gerais.
The French company offered 250 million reais at the end of
August to buy four units of Brazilian dairy LBR-Lácteos Brasil,
which is currently in bankruptcy protection. The French company has
also worked to win the right to use the Parmalat brand name in
Brazil, according to Marcelo Ricupero, a lawyer with the law firm
of Mattos Filho who is working for Lactalis on the LBR deal.
Parmalat is controlled by Lactalis, but LBR had the license to use
the brand name in Brazil.
The offer for LBR still has to be approved by a bankruptcy
judge, but Lactalis is moving ahead with the process and preparing
to ask the Brazilian anti-trust agency to allow the acquisition,
Mr. Ricupero said.
Lactalis said it has a presence in 145 countries and over 54,000
employees.
BRF was represented by Brazilian investment bank Itau BBA to
coordinate the sale of its dairy division and Lactalis was
represented by Indusval.
Write to Luciana Magalhaes at luciana.magalhaes@wsj.com
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