Embattled meat packer JBS will have its work cut out finding a buyer with the necessary scale to take over Moy Park, City dealmakers and meat sources have warned.
The Northern Ireland supplier is one of the biggest poultry processors in Europe, turning over £1.4bn and processing more than 260 million birds a year.
JBS this week included Moy Park in a touted asset sell-off designed to raise 6bn Brazilian reals (£1.7bn) to shore up its balance sheet in the wake of a political corruption scandal in Brazil.
Dealmakers raised concerns about the lack of viable buyers with the scale to buy Moy Park, which JBS acquired for $1.5bn (at the time worth about £950m) from Marfrig in June 2015.
“There wasn’t a huge amount of interest when JBS bought Moy Park so there won’t be many underbidders to speak to,” one City source said. “An overseas buyer is the most likely option, with one or two Thai businesses that have the right kind of scale.
“Big US players could also take a look thanks to the favourable currency movements.”
A meat industry source added: “I can’t see a lot of appetite as any buyer would really need global scale and access to many markets.”
Rival poultry processor 2 Sisters would struggle to get a deal past competition authorities; pork supplier Cranswick, which entered the poultry category with the acquisition of Crown Chicken in 2016, doesn’t have the right scale; and Faccenda could not afford the asking price, another dealmaker said.
“It would take a brave private equity firm to take on the business but one of the big players may step in. However, it is the same problem in three years’ time: where is the exit?”
Speculation has mounted an MBO led by CEO Janet McCollum could be an option. “At this stage we don’t know for certain if Moy Park will ultimately be sold,” said a Moy Park source.
“It’s a consultative process, but clearly JBS wants to reduce its debt. That is the motivation behind the consultation, not our performance.”
JBS was recently accused of bribing Brazilian government officials in relation to food inspections and the quality of meat it processed. The group paid a R10.3bn (£2.5bn) fine in relation to the scandal and its chiefs Joesley and Wesley Batista resigned their board positions in late May.
The asset sell-off on Tuesday has since been complicated by a Brazilian judge who on Wednesday stopped JBS from selling $300m of its assets in Argentina, Paraguay and Uruguay to competitor Minerva. Reuters reported the ruling that the sale could interfere with the corruption investigation.
JBS said in a brief statement that it would “take the necessary legal measures in order to appeal the decision”.
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