BRF S.A. acquires 79.48% stake in Banvit Bandırma Vitaminli Yem Sanayi A.S
The company signs an agreement to acquire the operations of Banvit, the country’s largest poultry producer and market Leader
In yet another step in its international expansion, BRF arrives in Turkey, the world’s largest consumer of halal chicken, to acquire the operations of Banvit, the country’s largest poultry producer and market leader. The transaction will be via a joint venture between BRF and Qatar Investment Authority (QIA), the sovereign fund of Qatar, which will hold 60% and 40% interests, respectively.
“The units are located in the country’s West, which concentrates most consumers, and East, which positions it as the only company capable of serving both the domestic and export markets,” said Pedro Faria, Global CEO of BRF.
The assets of Banvit will be incorporated into OneFoods, a BRF subsidiary led by Patricio Rohner and dedicated to the halal market. “The acquisition of Banvit is the first step on the agenda to accelerate the growth of OneFoods, which holds market share in chicken products of approximately 45% in Saudi Arabia, United Arab Emirates, Kuwait, Qatar and Oman, countries where it operates with its own distribution and a broad product portfolio,” explained Rohner.
Turkey, which has a population of 80 million, accounts for 10% the global consumption of halal poultry. Even so, local per-capita chicken consumption is low, at around 20 kilogrammes per year, and the penetration of processed food products is low, which means that the Turkish market offers excellent potential for growth. “In addition to the growth opportunities offered by the Turkish market, especially in processed products, we see important commercial and operational synergies to capture by integrating the operations of Banvit and OneFoods, which will further consolidate our strength and leadership in the halal animal protein market,” said Rohner.
The consummation of the transaction, which in its first phase involves the acquisition of a 79.5% interest in Banvit, followed later by a tender offer for the remaining minority interest of 20.5%, is subject to fulfilment of the conditions precedent in the final documents, including approval by the antitrust authority. Banvit’s firm value was estimated at $470 million.
Interview by Gazme Çiğdemtekin Özer and Tuna Çakırca, Partner at Cigdemtekin Dora Cakirca Aranci
Please tell me about your involvement in the deal?
Cigdemtekin Dora Cakirca Aranci acted as the exclusive legal counsel to the controlling shareholders of Banvit: Görener family, Koçman Family and Aabar Investments PJS. The transaction was a private auction process and we assisted the Sellers in preparation and organisation of the entire auction process together with financial and strategy advisors. We assisted the target company to prepare a data room, prepared the transaction documents and negotiated the transaction documents on behalf of the Sellers.
Why is this a good deal for all involved?
The Sellers will be receiving the return of the investment and the value which they have created over years. A valuable asset like Banvit will give BRF a strong entry into Turkey, a market where BRF is not currently present. BRF understands that the Turkish market represents a unique opportunity to operate in one of the largest protein markets in the world, aligned with BRF’s goal of bringing consumers access to quality food products. We also believe the holders of the shares listed on Borsa Istanbul will gain good benefit and return on their investments since the transaction will require a mandatory tender offer to be conducted after closing.
What challenges arose? How did you navigate them?
Turkey is going through a difficult phase with respect to the attempted coup and Syrian war and their impacts in the country. These factors generally affect the appetite of foreign investors to invest in Turkey. So, it was important to demonstrate to the investors: (i) the strength of Banvit as the leading player in its sector and its strong presence domestically, as well as in CEE and Middle East; and (ii) the growth opportunities in Turkey and in the region offered by the acquisition of Banvit. Also, there were different approaches of the parties with respect to risk sharing and there was a big gap between the expectations of the parties, nevertheless we managed to bridge this gap by using certain products which are fairly new to the Turkish market. Since Banvit is a listed company, the process required all parties to observe interests of minority shareholders, requirements of the capital markets legislation, as well as requests by the Capital Markets Board and Borsa Istanbul. While this aspect of the transaction was a challange from time to time, it was handled smoothly.
