Marfrig and BRF merger creates R$152bn global food powerhouse

The transaction involves the incorporation of BRF shares into Marfrig at an exchange ratio of 0.8521 Marfrig share for each BRF share. As part of the agreement, BRF shareholders will receive up to R$3.52 billion in dividends, while Marfrig shareholders will receive R$2.5 billion.

“The merger unlocks value and creates the structure needed for relocating the company’s headquarters abroad,” said Marcos Molina, controlling shareholder and chairman of the boards of Marfrig and BRF, in an interview with Valor.

According to Mr. Molina, the new company’s growth drivers—Marfrig, BRF, and U.S. subsidiary National Beef—are centered in the United States, the Middle East, and China. Of MBRF’s estimated net revenue, 43% comes from the U.S., 24% from Brazil, 20% from Asia, and 13% from other markets.

In this context, North America is a potential destination for the company’s new headquarters. “This brings significant advantages, such as high liquidity in the U.S. market, access to more attractive capital costs, and the potential for a revaluation of the companies’ multiples,” he said.

Mr. Molina did not say when the relocation might take place.

New synergies

He noted that BRF’s management has been preparing for this moment over the past three years, ever since Marfrig gained control of the poultry and pork producer. Since BRF returned to profitability, the two companies have already been pursuing commercial synergies.

In his view, the companies have captured all the synergies they could under the previous structure. To unlock further gains, a full business combination was essential.

The newly mapped commercial and logistical synergies in MBRF amount to R$805 million per year, with R$400 million to R$500 million expected in the first 12 months and the remainder in the medium to long term.

On the revenue and cost fronts, the goal is to achieve R$485 million per year in synergies. Operating expenses are expected to fall by about R$320 million annually, with measures such as unified commercial and logistics operations, a consolidated IT system, and streamlined corporate structure.

There is also an estimated R$3 billion in present-value tax synergies through the consolidation of corporate tax IDs (CNPJs), which would accelerate the monetization of federal and state tax credits.

Since Marfrig already held 53% of BRF’s capital, the transaction will not require approval by Brazil’s antitrust regulator CADE, Mr. Molina said.

The companies will now call shareholder meetings to vote on the merger. The meetings are expected to take place on June 18, with the transaction slated for completion on July 28.

Of the new company’s total sales, 38% come from processed foods, 34% from poultry and pork, and 29% from beef.

MBRF launches as one of the world’s largest food companies, operating in 117 countries and managing brands such as Sadia, Perdigão, Qualy, Banvit, and Bassi. Its portfolio includes beef, pork, and poultry products, processed items, ready meals, and pet food.

Back in 2019, Marfrig and BRF had discussed a merger but abandoned the talks over disagreements on governance. Marfrig then began acquiring BRF shares until it gained control, now holding 53%.

In 2023, Marfrig sold most of its beef operations in South America to Minerva, aiming to refocus on higher-value-added products.