Two of Brazil’s biggest food companies announced on Tuesday plans to merge, creating an exporting powerhouse in a stock swap deal prompted by the global financial crisis. Executives from Perdigao SA and Sadia SA said they expect their new enterprise, to be called Brasil Foods SA, to become the world's top exporter of processed meat and chicken.
The merger creates a global food powerhouse with combined annual revenue of 10.6 billion US dollars, 42 plants and a workforce of 119.000. The two were already Brazil's leading chicken and frozen food producers.
The deal is subject to regulatory approval in Brazil and Europe, a top market for Brazilian exports such as chicken. Analysts predict Brazil's government will quickly back it amid a broader push to boost large companies hurt by the economic downturn.
We have a planet to conquer, Perdigao chief executive Nildemar Secches told reporters.
Perdigao will control 68% of the new enterprise and Sadia will have a 32% stake, Secches said. It will also look to raise as much as 1.9 billion USD in a public offering of new shares by July, he added.
Sadia sought a partner after losing nearly 400 million USD on bad currency bets as Brazil's Real dropped last year. Those losses surpassed the company's 2007 profits.
The new company will dominate many areas of Brazilian food sales, including frozen and processed meat products, margarine and pizza. Brazil's largest newspaper, Folha de S. Paulo, meanwhile predicted that its sales abroad will reach 4.8 billion USD.
Luiz Furlan led Sadia for a decade before serving as trade and industry minister in Brazilian President Lula da Silva's administration. He resigned in 2007 and returned to Sadia last October as the financial crisis worsened.
He and Secches will share the chief executive post at the new company for two years.