São Paulo-based BRF announced on Tuesday 18 October that its shareholders had agreed to buy $20m-worth of shares in China’s Cofco Meat in an initial public offering, expected in the Hong Kong Stock Exchange on 1 November.
Cofco Meat, part owned by KKR & Co, a US-based private equity firm, is a rapidly growing, vertically integrated pork business in China, according to BRF. Cofco Meat reportedly operates 47 pig farms, two abattoirs and two meat-processing factories spread across mainland China.
According to Cofco Meat’s website, the business has the capacity to rear 1.5 million pigs per year, slaughter 4.5m hogs per annum with a capability of producing 18,000 tonnes of meat. The business also breeds 24m chickens and can slaughter 110m birds per year.
‘Cornerstone’
BRF and Cofco Meat have also entered into a non-binding strategic venture to strengthen both parties moving forwards. This will include bolstering BRF’s knowledge of Chinese laws and regulations governing meat production, as well opening to doors to joint investigations into opportunistic collaboration further down the line.
BRF called the move a “cornerstone agreement” that will see the business enhance its ability to manoeuvre and grow in China’s rapidly-growing pork industry.
“This transaction is in line with BRF’s strategic plan for globalising the company, accessing local markets and strengthening BRF’s brands, distribution and expansion of its product portfolio around the globe,” said the company in a statement.
Brazil has recently embarked on an aggressive multi-million dollar expansion strategy that has seen the business move to acquire stakes in meat companies around the world. In 2016 alone, BRF has acquired stakes in a number of companies, including: Argentina’s Globosuínos for $5.6m, UK’s Universal Meats for $49.5m and Malaysia’s FFM Berhad for $16m in 2016.