S&P affirms Marfrig

Standard & Poor's said it affirmed the B+ corporate credit rating on Marfrig Alimentos SA following its acquisition of Seara Alimentos Ltda. and its subsidiaries in Brazil and Europe from Cargill Inc. for $706.2 million in cash plus $193.8 million in debt.

The outlook is negative.

"The rating affirmation takes into account the positive implications of Marfrig's acquisition of Seara for its business profile, including synergies captured by their combined operations, as well as the risks associated with financing the transaction," S&P analyst Flavia Bedran said in a statement.

"The combined operations will provide Marfrig with economies of scale in pork and poultry production, more competitive sourcing of raw materials, improved price negotiating with clients, and a considerably larger distribution network. Moreover, Seara's well-recognized brand name benefits Marfrig with a national identity as a complement to its regional presence with local brands. This allows Marfrig to expand in consumer-branded products more rapidly. Seara's international presence will also boost Marfrig's export capabilities and increase its geographic diversification."

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