Background on Key Players
BRF and Marfrig are significant players in the global food industry. BRF, a Brazilian-based company, specializes in processed foods and is known for its extensive portfolio of brands. Marfrig, on the other hand, focuses primarily on beef production and is one of the largest players in the global meat market.
Merger Details
The Brazilian Council of Economic Defense (Cade) approved the merger between Marfrig and BRF, according to a joint statement released on Friday. Cade stated that the transaction was approved without restrictions as it does not pose any competition concerns.
“The combined market share of the companies in overlapping horizontal markets, where both offer similar products and compete, is less than 20%,” Cade explained in a press release.
In May, the companies announced a plan for Marfrig, which already held a majority stake in BRF, to acquire the remaining shares of BRF through a stock swap. Under the agreement, each BRF share will be exchanged for 0.8521 Marfrig shares.
Formation of the New Entity
The merger between Marfrig and BRF will create a new company named MBRF, which will be another global producer and exporter of food products based in Brazil with factories located in multiple locations, including the United States, Middle East, and China.
Prior to Cade’s latest decision, a competing food company, Minerva, sought authorization to scrutinize the merger more closely due to a minority shareholder it shared with BRF.
SALIC International Investment Company, a wholly-owned subsidiary of Saudi Agricultural and Livestock Investment Company, recently announced a change in its investment structure in BRF.
Impact and Future Outlook
This merger is expected to create a more diversified and robust food company, capable of expanding its global footprint. The combined entity will benefit from Marfrig’s strong beef production capabilities and BRF’s extensive processed food portfolio, potentially leading to increased market share and enhanced competitiveness.
The approval by Cade without any restrictions indicates that the regulator believes the merger will not negatively impact competition in the market. This decision paves the way for the creation of MBRF, which is poised to become a significant player in the global food industry.
Key Questions and Answers
- What is the merger between BRF and Marfrig about? The Brazilian companies BRF, a processed food producer, and Marfrig, a beef production specialist, are merging to form a new entity called MBRF.
- Why is this merger significant? The combined entity will have a diversified product portfolio, including processed foods and beef production, allowing it to expand its global presence and compete more effectively in the food industry.
- What did Cade’s approval entail? The Brazilian Council of Economic Defense (Cade) approved the merger without any restrictions, stating that it does not pose competition concerns.
- What changes will occur with the new company, MBRF? MBRF will be a global producer and exporter of food products based in Brazil with factories in multiple locations, including the United States, Middle East, and China.
- What was the role of SALIC International Investment Company in this merger? SALIC International Investment Company, a subsidiary of Saudi Agricultural and Livestock Investment Company, recently changed its investment structure in BRF.
