Brazil’s largest food company Perdigao SA has agreed to take over its rival Sadia SA. This transaction will result in the world’s largest poultry processor by market value, reportedly taking over the Tyson Foods.
Perdigao will change its name to BRF Brasil Foods SA and incorporate Sadia shares owned by HFF Participacoes SA, a holding company formed by investors who have more than 51% of Sadia’s voting stock. The new company will also sell 4 bln reais ($1.94 bln) of shares, reports Bloomberg.
The new company would be the No. 10 food company in the Americas, according to Economatica, with $11 bln in annual revenue, and Brazil’s largest employer, with more than 110,000 workers. It said it plans to focus on international expansion, including into the US and China, reports The Wall Street Journal.
“We are creating a champion,” said Sadia Chairman Luiz Fernando Furlan, who described the new firm as having “the musculature for world competition.”
It has been further reported that Perdigao shareholders will have 68% of the new company and Sadia 32%. The new company will be co-chaired by Perdigao Chairman Nildemar Secches and Sadia’s Furlan.
Combining the two companies will generate 2 bln reais of cost savings in distribution and production, according to Denise Messer, an equity analyst at Brascan Corretora in Rio de Janeiro. The two companies estimate that the potential cost savings could be as much as double that figure.
The combined new company would become the third-biggest meat processor in the Americas by sales after Tyson and Brazilian competitor JBS SA, according to Mariana Peringer, an equity analyst at Banco do Brasil SA in Sao Paulo.
Source: Bloomberg, and The Wall Street Journal