Ken Shwedel
Investigador de Agronegocios, Rabobank, México
30 de Junio - 4 de Julio de 2008
Investigador de Agronegocios, Rabobank, México
30 de Junio - 4 de Julio de 2008
The World
A week for M&A: Last week saw a series of activities in the M&A market around the world. This is a reflection of both the need to adjust structures to compete in an increasingly global agribusiness market as well as to adjust to the rapidly changing commodity and food based business environment.
Grains and oilseeds: Looking for scale and diversification Bunge, heavily in the soybean and fertilizer markets, announced a deal to acquire Corn Products International. What this does is give Bunge a wider range of products, particularly strengthening their downstream presence. They feel that the deal is complementary to their existing operations and will, likewise, provide “a presence in nearly every step of the…corn value chain.” With the sweetener and starch markets growing globally at around 5 percent annually, it is estimated that after the deal the corn related business will contribute in the neighborhood of 20 percent to Bunge’s pre-tax earnings. Besides a wider range of products the deal gives them “access to a number of important Asian markets where [they aren’t] active now.” Interestingly, they are also saying that there are synergies worth between US$100 million and US$120 million, coming largely from the procurement and logistics side of the business.
Animal protein: The meat industry saw some major restructuring last week as Marfrig Frigorificos e Comercio de Alimentos said that they would acquire OSI Group’s Brazilian business as well as the businesses in several European countries. Not only will this give Marfrig another US$2 billion in sales but also “expand [their] further processing capabilities in Brazil”. Additionally, it will strengthen the poultry side of Marfrig’s business, converting them into “one of the top ten poultry processors in the world”. As far as OSI is concerned, they become a “significant shareholder in Marfrig …expanding their sourcing platform in South Amerca”. While this was going on in South America, in Canada Tyson said that they would sell “the packing, feedyard and fertilizer assets of Lakeside Farm Industries Ltd and its subsidiary Lakeside Packers to XL Foods”. According to one analyst, Tyson’s decision to sell the Canadian business coming on the heels of Smithfied’s sale of part of their beef assets “reflects the extremely challenging prospects for meatpackers in North America going forward.” Now that they have reduced their Canadian business Tyson is saying that they will, internationally, focus on “Asia, Mexico and South America”. Don’t be surprised to see Tyson being now ready to make adjustment in their business model, including some acquisitions, in those regions.
Mexico
Beverages: In spite of their problems in Venezuela, where their installations are blocked, FEMSA continues to be upbeat about business opportunities in South America. As the week was coming to a close they announced that they would acquire Refrigerantes Minas Gerais Ltda. ("Remil") franchise territory in Brazil. The deal would give them access to Remil’s 114 million cases of carbonated beverages, expanding by about a third FEMSA’s presence in that country.
A week for M&A: Last week saw a series of activities in the M&A market around the world. This is a reflection of both the need to adjust structures to compete in an increasingly global agribusiness market as well as to adjust to the rapidly changing commodity and food based business environment.
Grains and oilseeds: Looking for scale and diversification Bunge, heavily in the soybean and fertilizer markets, announced a deal to acquire Corn Products International. What this does is give Bunge a wider range of products, particularly strengthening their downstream presence. They feel that the deal is complementary to their existing operations and will, likewise, provide “a presence in nearly every step of the…corn value chain.” With the sweetener and starch markets growing globally at around 5 percent annually, it is estimated that after the deal the corn related business will contribute in the neighborhood of 20 percent to Bunge’s pre-tax earnings. Besides a wider range of products the deal gives them “access to a number of important Asian markets where [they aren’t] active now.” Interestingly, they are also saying that there are synergies worth between US$100 million and US$120 million, coming largely from the procurement and logistics side of the business.
Animal protein: The meat industry saw some major restructuring last week as Marfrig Frigorificos e Comercio de Alimentos said that they would acquire OSI Group’s Brazilian business as well as the businesses in several European countries. Not only will this give Marfrig another US$2 billion in sales but also “expand [their] further processing capabilities in Brazil”. Additionally, it will strengthen the poultry side of Marfrig’s business, converting them into “one of the top ten poultry processors in the world”. As far as OSI is concerned, they become a “significant shareholder in Marfrig …expanding their sourcing platform in South Amerca”. While this was going on in South America, in Canada Tyson said that they would sell “the packing, feedyard and fertilizer assets of Lakeside Farm Industries Ltd and its subsidiary Lakeside Packers to XL Foods”. According to one analyst, Tyson’s decision to sell the Canadian business coming on the heels of Smithfied’s sale of part of their beef assets “reflects the extremely challenging prospects for meatpackers in North America going forward.” Now that they have reduced their Canadian business Tyson is saying that they will, internationally, focus on “Asia, Mexico and South America”. Don’t be surprised to see Tyson being now ready to make adjustment in their business model, including some acquisitions, in those regions.
Mexico
Beverages: In spite of their problems in Venezuela, where their installations are blocked, FEMSA continues to be upbeat about business opportunities in South America. As the week was coming to a close they announced that they would acquire Refrigerantes Minas Gerais Ltda. ("Remil") franchise territory in Brazil. The deal would give them access to Remil’s 114 million cases of carbonated beverages, expanding by about a third FEMSA’s presence in that country.
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