Brasil Foods will swap assets with Marfrig to meet competition requirements

Brasil Foods will swap assets with Marfrig to meet competition requirements

Brasil Foods plans to swap assets with rival Marfrig to meet a watchdog competition ruling on the merger that created the company.

Brasil Foods, Brazil's biggest food processor, was formed when Brazilian meat processors Perdigao and Sadia joined forces in 2009. However, the formal signing-off of the merger was on hold for two years as Brazilian antitrust regulator Cade assessed if the deal would be detrimental to competition.

In July, Cade endorsed a plan that would see Brasil Foods sell production assets, offload brands and restrict its use of products under the Perdigao brand in return for approval of the deal.

Today (9 December) Brasil Foods confirmed it would exchange a number of assets with Marfrig to meet Cade's stipulations.

Under the exchange, Brasil Foods will hand over trademarks, assets and rights of 12 food brands, including eight distribution centres and a hog slaughtering plant in the city of Carambei, as well as a 65% stake in sausage and frozen food company Excelsior Alimentos.

In exchange, Marfrig and its Argentina-based subsidiary Quickfood will give Brasil Foods assets of the Paty brand, the hamburger market leader in Argentina, including hamburger, cold cuts and vegetables processing sites, slaughtering plants, trademarks assets and other rights. It will also pay BRL200m (US$111m) to Brasil Foods.

A regulatory filing from Brasil Foods stated: "The management of both BRF and Marfrig will keep the market informed of developments pertaining to the present matter."

Approval is still subject to a decision from Marfrig's shareholders.