Brazil's JBS SA will acquire the poultry and pork unit of rival Marfrig Alimentos SA for 5.85 billion reais ($2.75 billion) in assumed debt, further extending its reach beyond its core beef business, reports Reuters. The transaction will give JBS, the world's largest meatpacker, Marfrig's Seara-branded Brazilian poultry, pork and processed foods business, along with a Uruguay-based leather operation.

JBS SA, already the world’s largest beef producer, would surpass Tyson Foods Inc. as the world’s largest poultry producer following the completion of the deal. The deal will also allow Marfrig to focus on its beef operation in Brazil, the filing said, while JBS will become the second-largest processed meat producer in the country.

JBS SA announced last week that it had passed on a bid for Smithfield Foods. Share of the company fell initially after announcing it would take on the $2.7 billion in debt from Marfrig. The company had total debt of 21.2 billion reais (approx. $9.9 billion)at the end of last quarter, reports Bloomberg Businessweek.

“We will have to delay our deleverage process a bit,” said JBS CEO Wesley Batista at a Sao Paulo press conference with Seara CEO Sergio Rial, without offering a new timeframe. “The acquisition should help generate cash, which will help cut debt.”

The deal is subject to regulatory approval by Brazil's antitrust watchdog, Cade. In April, Cade approved JBS's purchase of Brazil's Bertin and 11 smaller meatpackers, but said it would monitor JBS's position in the Brazilian beef market.

Sources: Bloomberg, Reuters