Vall Companys’ Agreement to Purchase up to a 32.7% Stake in Master Agroindustrial
Master Agroindustrial is a traditional Brazilian pork corporation whose primary businesses relate to the breeding of pigs, the production and retail sale of food and concentrates for animals, the processing of meat and the wholesale and retail export and import of pork and its derivatives, including both raw materials and packaging.
Vall Companys is a leading Spanish family-run agri-food group. Its portfolio currently includes 2,186 associated farms that produce around 453,000 tons of pork and 170,000 tons of chicken annually.
The transaction between the companies, completed on 15 March 2023 for an unspecified sum, comes as part of a plan of cash reinforcement and investment in the expansion of production in both its external and internal markets. For now, Vall Companys has provided for a minor capital increase, but if the deal proves to be successful and long-lasting, it will be able to attain up to 32.778% of Master Agroindustrial’s share capital.
Küster Machado Advogados advised Master Agroindustrial. Demarest Abogados and Rebés Ferrer advised Vall Companys.
Lawyer Monthly had the pleasure to speak with Juliana Goetzke de Almeida, Head of Corporate and Tax Dpt. and Managing Partner of São Paulo Offices at Küster Machado Advogados to give us some further insight into this transaction:
Can you tell us more about the background to this deal and the role that your team played in it?
Negotiations developed rapidly, as all parties involved were eager to achieve a far-reaching investment and operational integration deal. Legal teams had to overcome challenging deadlines that could have led to some wearing negotiations, but the outcome was very positive, as all professionals involved were able to build a very respectful, collaborative and efficient work environment.
Also, Brazilian and Spanish business culture, legal and tax realities are different, and this was the first exponential M&A performed by Master Agroindustrial. Thus, our team played a key role in translating the shareholders’ main concerns to Vall Companys and vice versa, due to their expertise in M&A and agrobusiness market-related matters and deep knowledge of Master Agroindustrial’s activities. These factors contributed to favourable negotiations and to designing a structure suitable to the companies’ objectives.
What challenges did you encounter during the course of the transaction, and what skills and specialities did you use to overcome them?
The entire process – from negotiations to closing – lasted only a few months, with short deadlines. This scenario tested negotiation skills, fast analytical analysis, decision-making ability, emotional control and interpersonal skills, as multiple meetings and discussions were being carried simultaneously. The agreements were drafted and altered daily, risk assessment analyses from both legal teams were on the table, due diligence procedures were not concluded up to the very end, and changes in the structure were made until the last minutes.
Additionally, knowing the clients’ businesses, culture and situations proved to be an important asset to negotiations and to afford assurance to the clients throughout the process. Moreover, M&A transactions are notoriously gruelling and stressful to the administration and this was no exception. Encouraging and providing a collaborative and reliable environment was essential. The main goal of any lawyer engaged in these transactions should be to ease the path to an efficient agreement and not foster disputes. To achieve this, lawyers must always negotiate professionally and respectfully. The way negotiations are carried out throughout the M&A procedures often sets the tone for further encounters and can hinder the future business relationship.
What will the impact of this transaction be on Master Agroindustrial and the wider agricultural sector?
The global pork market is worth roughly $250 billion and is expected to double in size by 2028. Brazil in one of the leading export countries in this market. M&A operations in the country have significantly intensified in recent years, across all pork-related submarkets.
The transaction between Vall Companys and Master Agroindustrial brings together two big corporations, joining forces to strengthen their position globally. One of the main goals of the transaction is to enable operational collaboration through exchanging expertise to maximise production, optimise the capacity of the facilities, improve and increase the slaughtering and deboning of pigs and advance commercialisation at the international level. This collaboration undoubtedly represents a turning point for both companies, as it is set to increase their participation in foreign markets, especially those of greatest demand (China, Korea and other Asian markets).