QIA, BRF buy Turkey’s top poultry producer
January 11 2017 01:18 AM

Bloomberg/Sao Paulo/Istanbul

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.

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