Background on Key Players and Relevance
BRF, a leading global food company specializing in processed meats and fresh meat products, and Marfrig, a major beef producer, have announced their merger to form MBRF. This new entity will become the world’s largest food conglomerate, with operations in 117 countries and annual revenues of $28 billion. MBRF will own popular brands such as Sadia, Perdigão, Qualy, Banvit, and Bassi.
Marfrig’s Acquisition of BRF
Marfrig, which already held a majority stake in BRF, completed the acquisition of the remaining shares through a stock swap. The Brazilian Council of Economic Defense (Cade) approved the merger unanimously, stating that it does not pose any competitive concerns.
Minerva Foods’ Concerns and Resolution
Minerva Foods, another significant player in the Brazilian meat industry, initially raised concerns about the merger. They argued that Salic’s involvement in both Marfrig and Minerva, along with their acquisition activities in Uruguay, could create competitive risks. However, Cade reviewed the case and decided that Salic’s sale of its stake in BRF mitigated these concerns.
Merger Details and Synergies
The combined market share of BRF and Marfrig falls below the 20% threshold, which is considered non-dominant under Brazilian law. The merger will generate annual commercial and logistical synergies worth $148 million, with an estimated $70-$90 million in the first 12 months and the remainder over medium to long-term.
Strategic Rationale Behind the Merger
Marcos Molina, controlling shareholder and president of both BRF and Marfrig’s boards, highlighted the strategic benefits of the merger. He stated that the management team has been preparing BRF for this moment since Marfrig took control of the poultry and pork operations three years ago. The companies have been working on commercial synergies, such as joint marketing efforts.
Shareholder Approval
In August, both BRF and Marfrig shareholders approved the merger proposal, which would create MBRF. BRF received approval from 78.39% of the votes, while Marfrig garnered support from 86.71% of its shareholders.
Key Questions and Answers
- What is the new company’s name? The merged entity will be called MBRF.
- What industries does MBRF operate in? MBRF will specialize in processed meats, fresh meat products, and other food items.
- How large will MBRF be in terms of revenue and presence? MBRF will generate $28 billion annually and have a presence in 117 countries.
- What brands will MBRF own? MBRF will own popular brands such as Sadia, Perdigão, Qualy, Banvit, and Bassi.
- What are the annual synergies expected from this merger? The merger is projected to yield $148 million in annual commercial and logistical synergies.
- Why did Minerva Foods raise concerns about the merger? Minerva Foods was worried about potential competitive risks due to Salic’s involvement in both Marfrig and Minerva, as well as their acquisition activities in Uruguay.
- What percentage of shares did Marfrig acquire from BRF? Marfrig acquired the remaining shares of BRF, completing its acquisition through a stock swap.
- How were BRF and Marfrig shareholders’ approval rates for the merger? BRF received 78.39% of the votes in favor, while Marfrig garnered 86.71% support from its shareholders.
