Marfrig, BRF proceed with merger plans

Marfrig Global Foods and BRF have jointly announced an intent to merge the two Brazil-based animal protein companies.

If the transaction is finalized, the combined company will be known as MBRF Global Foods Company SA.

About BRF and Marfrig Global Foods

The two companies have had a strong affiliation since Marfrig initially purchased 24.23% of BRF’s shares in 2021. Marfrig has continued to increase its ownership of BRF since that time, becoming the majority shareholder in December 2021. The two companies also share the same chairman, Marcos Antonio Molina dos Santos, who had previously referred to BRF and Marfrig as “sister companies” and hinted that a merger would eventually happen.

A joint filing by BRF and Marfrig stated that the “plan of merger” has been initiated, and that plan consists of the acquisition by Marfrig of the remaining BRF shares, in exchange for the issuance to BRF shareholders of common shares of Marfrig. The proposed merger will be discussed at upcoming BRF and Marfrig board meetings, both scheduled for June 28.

BRF is primarily known as a poultry and pork producer, ranking as the world’s third largest poultry producer, having slaughtered 1.67 billion broilers during the past year, according to the WATTPoultry.com Top Poultry Companies Database. In addition to its South American operations, BRF, formerly known as Brasil Foods, has a strong presence in the Middle East.

Marfrig is primarily known as a beef producer, but the joint filing also revealed its slaughter activities also include cattle, horses, pigs, goats, sheep, poultry and buffalo. It is also the former parent company of Keystone Foods, which was acquired by Tyson Foods in 2018.

Both companies rank among the world’s largest feed companies, as BRF is the world’s 14^th largest feed producer and Marfrig is the world’s 132^nd largest feed producer, having respectively produced 9.6 million and 1.1 million metric tons during the past year, according to information from the Feed Strategy Top Feed Companies Database.

Anticipated benefits of merger

In the joint filing, BRF and Marfrig stated: “The merger aims to create a global food company based on a multiprotein platform, with a strong presence in both domestic and international markets, portfolio diversification, scale, efficiency, and sustainability, providing significant benefits to both companies, their shareholders, customers, suppliers, employees, and other stakeholders, generating operational, financial and strategic synergies

“Additionally, the companies believe that the merger allows for the simplification and optimization of the administrative and corporate structure of the economic group to which they belong, eliminating or reducing redundant costs, and improving or facilitating access to the capital necessary for the development of their business plans. In this regard, the companies believe that the merger will have significant strategic value added, driving global consolidation of their businesses and strengthening their brands through a robust multi-protein platform.”

It was also stated that the companies’ management does not foresee any material risks involved with the merger beyond those typically associated with both BRF’s and Marfrig’s daily activities.

“Moreover, the success of the merger will depend, in part, on the group’s ability to reduce expenses and optimize processes as a result of the simplification of its corporate structure and consolidation of its businesses,” the joint filing read. “If these objectives are not achieved successfully, the expected benefits from the merger may not fully materialize or may take longer than anticipated to be realized.”

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