Minerva’s new slaughter market share and ARU’s concerns
The new proposal by Minerva Group to acquire three of its competitor Marfrig’s plants in Uruguay —while later divesting two— would not significantly alter market concentration, aside from the group’s clear dominance with just over one-third of the national slaughter. Based on data from the first half of this year, Marfrig, with its four plants (Colonia, Inaler, La Caballada, and Tacuarembó), accounted for 29% of total slaughter, while its competitor Minerva, also operating four plants (Carrasco, Pul, Canelones, and BPU), reached 24.8%. The Urgal family (Pando and San Jacinto) completed the top three with 16.2%.
Minerva’s share may be slightly skewed, as its most recent acquisition, BPU, was shut down for several months due to a labor dispute until March this year. Currently, the plant accounts for 3.5% of total slaughter, but in a regular year, it operates at around 6%. Assuming “normal” operations at the six plants Minerva would own—including Inaler (5.7%) and La Caballada (7%), with Colonia going to Indian group Allana—Minerva’s share would rise to 40.2%.
However, Minerva announced it would divest Inaler-San José within a maximum period of 24 months. In that case, its share would drop to 34.5%, about five points above Marfrig’s current 29% as the top group. If the deal goes through, Minerva would be significantly ahead of the second-largest group, the Urgal family, which holds just under half of Minerva’s share (16.2%).
Marfrig would drop from 29% with four plants to 12% with just its remaining plant in Uruguay (Tacuarembó). A crucial detail in this potential scenario is who will take over the Inaler plant.
ARU’s criticism
ARU president Rafael Ferber did not hide his surprise at Minerva’s new maneuver to push the deal forward in Uruguay. Speaking on Carve radio, Ferber said it was “expected” that new steps would emerge. “What Minerva is now proposing (the sale of Inaler), it already proposed to CADE (Brazil’s equivalent of Uruguay’s Coprodec) and failed to follow through. It had a deadline to sell a plant and didn’t do it, and now that plant is close to being auctioned,” he claimed.
In Ferber’s view, it’s concerning that Minerva wants to keep expanding. “Why buy so many plants if you’re going to sell them afterwards? It’s all very strange,” he said. He also pointed out that the Indian group Allana —set to buy the Colonia plant— paid a “very high price” (US$ 48 million) without “even seeing it,” and did so under the name of the group owner’s son, using a new company registered in Spain. “This doesn’t hold up under any serious analysis,” Ferber remarked.
Additionally, the ARU president argued that, instead of just looking at slaughter market share, idle capacity should be considered. Using common sense, Ferber suggested Minerva’s new proposal is part of the “fierce battle and war” it’s waging with Marfrig in Brazil. “Is Minerva trying to block Marfrig’s growth in Uruguay for five years? Well, that’s one possibility,” he speculated. He also suggested another hypothesis: “removing slaughterhouses” from the market to control Uruguay’s slaughter capacity —and therefore, cattle prices. “That would be the most straightforward reasoning one could make today,” he added.
