Japan's Marubeni buys beef supplier from US GP

The size of the transaction was not disclosed, but Nikkei Asian Review reported the deal was worth around $170 million, including debt. It brings to an end a 12-year holding period for Sun Capital, which acquired a majority stake in the business in 2005, not long after a mad cow disease scare in the US hit beef exports.

Creekstone supplies Black Angus beef and antibiotic-free Duroc pork from processing plants in Kansas to high-end grocers and restaurants across the US. The company has a processing capacity of 1,400 cattle per day. Products are also exported to Europe, Latin America, and Asia.

Sun Capital claims to have undertaken a range of improvements, including the recruitment of experienced management team members, increasing the all-natural share of the product line from less than 5% to around 22%, and expanding the international business by more than 800%. Exports now account for approximately 20% of total sales.

Marubeni said in a statement that the acquisition is complementary to its existing cattle feed and beef distribution business in Australia, Rangers Valley. The company expects demand for beef to increase globally, and the US and Australia are the world’s largest beef-producing countries.

It has been estimated that Asia will account for 47% of global beef imports by 2024, driven by demand from emerging markets. For example, per capita consumption in China increased by 11 kilograms between 2003 and 2014, but the annual intake of 57 kg still trails Taiwan’s 74 kg. China’s beef imports hit $2.6 billion last year, but a 14-year ban on shipments from the US was only lifted earlier this year.

The US beef industry was worth $67.6 billion in 2016, according to the National Cattlemen’s Beef Association, with 30.5 million head of cattle slaughtered for the commercial market. Exports came to 1.19 million metric tons, of which 22% - the largest share – went to Japan, generating proceeds of $1.51 billion. South Korea and Hong Kong rank third and fifth, respectively, in terms of imports from the US.

“We followed a comprehensive strategy for improving Creekstone Farms,” said Jordan Wadsworth, a principal at Sun Capital, in a separate statement. “By bringing in a best-in-industry leadership team and expanding our product offerings in line with trends in consumer demand, we were able to improve Creekstone Farms’ business fundamentals and turn a good company into a great one.”

The private equity firm, which has $9 billion in capital under management, targets lower middle and middle-market companies with between $50 million and $1.5 billion in revenue. It has backed 340 businesses since 1995. Sun Capital has offices in Boca Raton, Los Angeles and New York, and affiliates in London, Frankfurt and Shenzhen.

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• Topics
• North America
• North Asia
• Consumer
• Trade sale
• Japan
• USA
• Exit
• Agriculture