Marfrig Acquires U.S.-Based National Beef

Marfrig

Marfrig Global Foods, one of the world’s largest animal protein producers, announces that it has reached an agreement for the acquisition of 51% of the membership interests in National Beef Packing Company, LLC, the fourth-largest beef processor in the United States. Marfrig has agreed to pay USD 969m for the equity interest and, once the transaction is concluded, will become the world’s second-largest beef processor, with consolidated sales of USD 13bn.

Founded in 1992, National Beef reported sales of USD 7.3bn in 2017 and, since 2011, has been controlled by Leucadia National Corporation, which currently holds a 79% interest.  National Beef has a slaughtering capacity of 12,000 heads of cattle per day and is headquartered in Kansas City. It has 2 slaughterhouses located in Dodge City and Liberal, Kansas and accounts for approximately 13% of total U.S. cattle slaughtering capacity. National Beef is one of the most profitable beef companies in the United States. Once the transaction closes, Leucadia will transfer control to Marfrig and remain a minority shareholder in National Beef, with a 31% interest. The US Premium Beef, an association of American producers, will hold 15% and other shareholders with the remaining 3%.

Leucadia and the other investors have agreed not to sell their shares in National Beef for at least five years. The transaction imputes an enterprise value to National Beef of USD 2.3bn, including debt, which results in an EV/LTM EBITDA multiple of 4.4 times.

“The acquisition of National Beef represents the realization of a unique opportunity,” said Martín Secco, CEO of Marfrig. “With the transaction, we will have operations in the world’s two largest beef markets, will gain access to extremely sophisticated consumer countries and will be able to grow while maintaining rigorous financial discipline.”

The key executives of National Beef, including its CEO Tim Klein, will continue to manage and remain at the company. The Board of Managers of National Beef will consist of nine members, of which five will be nominated by Marfrig, two by Leucadia and two by the other minority members. “We are pleased to remain a significant shareholder in National Beef and to partner with Marfrig and the company’s management team in its continued development”, said Rich Handler, CEO at Leucadia and Brian Friedman, President of Leucadia.

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