It started the way these things do, with talks at Philadelphia's outpost of the posh Four Seasons Hotel chain on Logan Square, in March.
Jerry Dean, chief executive officer of Keystone Foods L.L.C., West Conshohocken-based supplier of sandwich meats to McDonald's and other fast-food retailers around the globe, sat for four hours with Marcos Molina, his counterpart at Brazil-based Marfrig Alimentos S.A., "talking about what it would look like if the companies combined," Dean said.
We spoke Tuesday, a few hours after Marfrig made official its $1.26 billion cash-and-debt acquisition of Keystone. Marfrig, the larger company, bought Keystone, creating one big, $16 billion multinational.
That suited Keystone's owners: Lindsay Goldberg L.L.C., a New York private-equity firm; the family of Keystone founder and chairman Herbert Lotman, who had ceded majority control when he sold Keystone a stake in 2004; and Dean and his fellow managers.
Keystone has 13,000-plus employees in the U.S., France, Britain, the Middle East, China and neighboring countries, and Australia. That includes about 300 at its headquarters at Five Tower Bridge, its 11/2-year-old 24-hour West Chester food lab, and its new Coatesville distribution center.
"The company was never really put up for sale," said Dean, a Mount Airy native who graduated from the Wharton School in 1975 after taking his diploma from La Salle College High School.
But a sale became inevitable with Lindsay Goldberg's investment: "You would expect at some point a private-equity firm would want liquidity for their investors. That's the business they're in." Founders Robert D. Lindsay, a veteran of Bessemer Holdings L.P., and Alan E. Goldberg, an ex-Morgan Stanley executive, did not return messages seeking comment.
Dean said he'd talked about various combinations with other big meat merchants. He and his investors liked the fit with Marfrig, whose business in Latin America and Europe complements Keystone's units in Asia and the English-speaking world.
Dean said last month's U.S. ban on Brazilian meat imports didn't affect the deal: "Our preference is to locate production in the country where the products will be sold," he told me.
Dean doesn't expect job cuts. Instead, "we're talking about some follow-on acquisitions that would make sense."
The House and Senate members stitching together a final bank-reform law seem to agree on "a tougher Volcker Rule" that would ban banks from buying and selling securities with their own money, while also keeping controversial Section 716, which would force Citigroup, JPMorgan Chase, and other big banks "to spin off [their] swaps desks," writes analyst Paul J. Miller Jr. and his team at FBR Capital Markets.
Negotiators seem willing to let banks keep those derivatives, trading, and swaps businesses if they raise extra capital instead of relying implicitly on government insurance, Miller added.
Miller is a former Federal Reserve Bank of Philadelphia bank examiner. The Volcker Rule is named for ex-Fed chairman Paul Volcker, who says letting banks buy and sell stocks, bonds, and derivatives creates conflicts of interest with their clients.
The House group is cutting banks some breaks. It appears to have thrown out Minnesota Democratic Sen. Al Franken's lottery system for assigning credit-rating agencies, which was supposed to make it harder for banks and other credit issuers to buy inflated reviews from Moody's and Standard & Poor's.
House Financial Services Committee boss Barney Frank (D., Mass.) is pushing tighter Securities and Exchange Commission regulation of private-equity managers, though small firms would be exempted, according to the Blank Rome Financial Reform Watch newsletter.
"The two most contentious items of financial reform - the newly-created Consumer Financial Protection regulator and the enhanced oversight of derivatives - will be dealt with next week," Blank Rome's Peter Peyser wrote clients Tuesday night.
"The somewhat divisive resolution authority provisions," which are supposed to break up banks before they are so big and complex the government has to bail them out, "will be considered this Thursday."
Contact Joseph N. DiStefano at 215-854-5194 or JoeD@phillynews.com.