Turkish poultry producer Banvit has signed a deal with Brazilian food processor BRF S.A. to sell a majority of its equity stake, the company said in a written statement to the Public Disclosure Platform (KAP) on Jan. 10.
The Brazilian company will buy 79.5 percent of Banvit’s total paid capital, according to the statement.
Under the deal, which preliminarily valued Banvit at 11.51 Turkish Liras ($3.07) per share, BRF will take a 60 percent stake in the joint venture, while the Qatar Investment Authority will take 40 percent in a deal that calculates Banvit’s enterprise value at $470 million.
“It’s a valuation we consider attractive,” BRF Vice President for Finance and Investor Relations Alexandre Borges said in an interview, as quoted by Reuters.
The deal is part of BRF’s move into the halal market, with Banvit integrating into OneFoods, a BRF subsidiary dedicated to halal food that began operations last week. The first phase of the deal involves the acquisition of 79.5 percent of Banvit, followed by a tender offer for the rest of the company, as reported by Reuters.
Banvit’s share was 12 percent higher at 9.85 early on Jan. 10 on Borsa Istanbul, Turkey’s main stock exchange, following the announcement of the deal, which is subject to approval by authorities.
Banvit said UniCredit/Yap Kredi has been the exclusive financial advisory of the shareholders for the transaction and that Çidemtekin Dora Çakrca Aranc Law has been the main legal consultant. The company added in a press statement that Helix Management Consultancy has been the main strategic consultant for shareholders.
Esin Attorney Partnership and Baker McKenzie also said they advised BRF S.A., one of the biggest poultry producers in the world, on signing the transaction documents for the acquisition of the majority equity stake in Banvit, together with Qatar Holding LLC, an affiliate of the Qatar Investment Authority, which will acquire a minority stake in Banvit through its joint venture with BRF.
Banvit, operational since 1968, is the biggest poultry company in Turkey in terms of sales and is listed on Borsa Istanbul. Banvit is a pioneer food company with fully integrated production facilities, which performs its social responsibilities and is sensitive to public health and the environment.
BRF is one of the world’s largest food companies, with a portfolio of more than 30 brands that include Sadia, Perdigão, Qualy, Paty, Dánica, Bocatti and Confidence. Its products are marketed in more than 150 countries on five continents. BRF employs more than 105,000 employees and has 54 production units in seven countries (Argentina, Brazil, the United Arab Emirates, the Netherlands, Malaysia, the United Kingdom and Thailand) and exports its products to over 150 countries.
QIA, BRF buy Turkey’s top poultry producer
BRF SA and the Qatar Investment Authority formed a joint venture to buy Turkey’s biggest poultry producer for $470mn in a bid to expand in halal food markets, sending shares of Banvit Bandirma Vitaminli Yem Sanayii to a 12-year high.
BRF, Brazil’s largest chicken exporter, and the QIA agreed to buy 100% of Banvit, including $130mn in net debt, the Sao Paulo-based company said on Monday in a regulatory filing. Banvit assets will be incorporated into Dubai-based One Foods Holding Ltd, created last week by BRF to hold the company’s production and distribution assets for food products for Muslim markets, it said.
“This acquisition strengthens BRF’s presence in the halal market,” BRF chief financial officer Alexandre Borges said by phone. “It’s the first step to speed up One Foods’ growth.”
Banvit is Turkey’s largest halal chicken producer with a 13% market share. While Banvit exports about 10% of its output, BRF plans to increase foreign sales helped by cost savings from its distribution and sales operations in other Muslim countries.
The stock of Bandirma, Turkey-based Banvit jumped as much as 17% to lead gains on the Borsa Istanbul All Share Index of 296 securities.
Banvit, which has five processing facilities and feed operations, will represent about a quarter of One Foods net sales, according to BRF’s filing.
BRF and Qatar’s sovereign fund will pay $270mn to Banvit’s controlling shareholders, followed by a public offer to acquire 20.5% from minority shareholders after the deal is approved. Borges said the company is still assessing funding to pay its share of the deal, equal to $162mn, including its halal unit IPO.
The 11.51 liras a share offer to Banvit’s founding investors represents a premium of 30% to the closing price on Monday, when the agreement was signed. The final price may change at the time of the payment, depending on the exchange rate between the Turkish lira and US dollar, the company’s earnings before interest, tax, depreciation and amortisation as well as outstanding borrowings, Banvit said in a statement yesterday.
The Brazilian company will hold 60% of the venture and the Qatar fund the balance. The agreement includes the possibility of the sovereign fund swapping its share in Banvit for a stake in One Foods, if the initial public offering of the halal unit is confirmed, Borges said.
“Qatar Investment Authority is a very important partner for BRF in halal markets,” he said.
Saudi Arabia’s decision last week to increase a tax on poultry imports, which made BRF’s shares tumble, demonstrates the importance of having local partners in Muslim markets, Borges said. BRF is the largest seller of chicken products in Saudi Arabia.
“This is part of our strategy as it reinforces the company’s long-term commitment with the region and its stakeholders,” Borges said.
While Turkey is the world’s largest chicken halal consumer, there is room for growth in the domestic market as per capita poultry consumption is 20kg (44lb) a year, about half of Brazil’s 39kg, according to Borges. Also, the potential to increase production and sales of processed items is huge, he said.
BRF expects to conclude the deal by the second quarter of 2017, after regulatory approvals. The company had halal sales of $2bn in 2015, about a fifth of its total revenue, BRF said in a October presentation.