Brazilian beef processor Marfrig announced on Thursday its plan to complete the takeover of poultry and pork processor BRF. The deal aims to create a powerful combined company, with future plans to list its shares in the United States.
Marfrig already owns just over 50% of BRF and has long sought to grow bigger to better compete with Brazil’s meatpacking leader, JBS. Like Marfrig and BRF, JBS is listed on the São Paulo stock exchange and is also considering a move to New York.
The acquisition will take place through a share swap. BRF shareholders will receive 0.8521 shares of Marfrig for each share they own in BRF. The two companies will form a new entity called MBRF, which will also include National Beef, a US-based meat processor owned by Marfrig.
The companies expect the merger to generate annual synergies of 805 million reais ($142 million). They anticipate capturing 400 to 500 million reais of those savings within the first year. Shareholders will vote on the deal on June 18.
Executives at BRF told analysts that the deal will combine the strengths of both companies. They believe the merger will help them compete more effectively with global food giants.
BRF’s CFO Fabio Mariano said the new company, MBRF, might move its fiscal headquarters and list shares in New York in the future. However, the initial focus will be on maximizing synergies from the merger.
Marfrig first bought nearly a quarter of BRF’s shares in May 2021 and gradually increased its stake to 50.49%, becoming the controlling shareholder.
Together, Marfrig and BRF reported combined net sales of 152 billion reais ($26.75 billion) over the last 12 months. About 38% of their revenue comes from processed food products, which typically have higher profit margins.
The market responded positively to the news. Shares of both companies rose in São Paulo on Thursday, outperforming competitors such as Minerva and JBS. BRF’s shares closed up 4.78% at 20.62 reais, with a peak gain of over 7% during the session. Marfrig’s shares rose 4.34% to 20.66 reais.
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