July 24, 2017

Japanese trading house Marubeni has acquired Kansas-based Creekstone Farms Premium Beef, a provider of premium beef and pork products, from Sun Capital Partners in a deal reported to be valued at $170 million.

Founded in 1995, Creekstone Farms is the twelfth largest U.S. packing company, processing 250,000 head of cattle last year generating $550 million in sales. The company’s business model focuses on supplying premium grain-fed black Angus beef to high-end steakhouses and supermarkets across the U.S. market, however, 20 percent of production last year was exported to European and Asian markets.

Following a  trade deal struck in May between China and the U.S. that reopened the Chinese market to U.S. beef imports, Creekstone Farms acquired its license to export to China, indicating that the acquisition by Marubeni is a strategic move to gain the leading edge in U.S. beef exports to China.

In addition to greater overseas export opportunities, driven by population growth and socio-economic improvements in emerging and developing countries, global beef consumption is expected to rise from 68.3 million tons in 2016 to 76 million tons in 2017 – more than a 10 percent increase year-on-year, according to data from the Organization for Economic Cooperation and Development, reports Nikkei Asian Review.

Marubeni has been positioned within the Australian beef sector since 1988, having acquired Australian feedlot operator Rangers Valley, which currently ships 40,000 head per year to markets across the Middle East, Japan, China, South Korea, and Europe. Together, Rangers Valley and Creekstone Farms will give Marubeni good standing in two of the world’s top beef producing and exporting countries.

“As the quality of eating habits improve worldwide, especially in emerging countries, it is predicted that the demand for beef will grow strongly,” said Marubeni in a company statement. “Meanwhile, the major producers of high quality, grain-fed cattle have been the United States and Australia as the production of such beef requires rich feed and water resources, advanced feeding technologies, and environmental measures.”

Sun Capital Exits

Sun Capital Partners specializes in leveraged buyouts and investments in companies that are leaders in their respective markets. The firm first acquired Creekstone Farms in February 2005, implementing improvements over the years including enhancing the leadership team, and expanding the company’s production of all natural products from less than 5 percent of production to about 22 percent. Over the course of its ownership, Sun Capital also oversaw the expansion of Creekstone Farm’s export business by 800 percent to 20 percent of total sales.

“We followed a comprehensive strategy for improving Creekstone Farms,” said Jordan Wadsworth, principal at Sun Capital. “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.”

Since 1995, Sun Capital has invested in more than 345 companies with revenue in excess of $45 billion. Other food related portfolio companies include Flavor 1st, a leading grower and distributor of fresh produce, and Fresh-Pak, a supplier of fresh sandwich fillings, pate, dips, and cooked egg products to the UK market.

-Lynda Kiernan

Lynda Kiernan is Editor with GAI Media and daily contributor to GAI News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.com.