Antitrust body doubts merger creating meat processor Brasil Foods
Brazil’s antitrust regulator has postponed a ruling on the merger that created food processor Brasil Foods. The rulilng would open the way for negotiations on an agreement that would allow the company to continue operating, Reuters reports.
Brasil Foods was formed after smaller food giant Perdigão agreed to take over its much larger rival, poultry producer Sadia. Brasil Foods, when all deals are fully finished, will be the world’s largest poultry exporter – and will also be involved in pork production for the Brazilian market. The company will be active in 110 countries around the world.
Mergers
A key member of Brazil’s antitrust regulator Cade voted last week against the merger that created food processor Brasil Foods, a setback that caused the company’s shares to plummet and prompted the body to suspend a vote on the ruling. The shares have sank 4.6% to 24.09 reais (US$15.22).
Carlos Ragazzo, the Cade director responsible for the ruling, voted against the June 2009 takeover of Sadia by Perdigão, saying the move to combine both firms created a giant that exerts too much power in a market where competitors face strong entry barriers.
Fellow members of Brasilia-based Cade’s board had already decided to suspend the ballot on the ruling until June 15, in order to assess the real impact of a decision that could spark billions of reais in losses to investors, shareholders and state-run lenders.
Rejection
Cade’s rejection of the transaction could thwart one of Brazil’s biggest government-engineered mergers. The initial takeover failed after reporting billions of dollars in derivatives-related losses in the wake of the global financial crisis of 2008. The government facilitated the transaction by deploying large credit lines through its state development bank BNDES.
Read more on Brasil Foods in an interview with Brasil Foods CEO José do Prado Fay.
Related websites:
• Brasil Foods (in Portuguese)
• Perdigão
• Sadia
• Reuters
