Marfrig Global Foods and BRF have proposed a plan to merge, which would create a rival to fellow Brazil meat giant JBS but with much lower revenues.
In a joint statement today (16 May), Marfrig and BRF said separate board meetings would be convened on 18 June to “deliberate on the merger”. If approved, Marfrig would become MBRF Global Foods Company.
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Marfrig is already BRF’s largest shareholder, holding a 50.49% interest in 2024, according to BRF’s annual report.
A business combination between the two publicly listed companies would result in “an increase in revenues and a reduction in costs” of around 485m reais ($85.3m) a year, according to the statement.
That would arise from “the acceleration of cross-selling opportunities, including volumes and other commercial fronts through logistical capillarity and brand strength, and supply chain synergies (raw materials, packaging, and inputs)”, it added.
In 2024, BRF generated 61.4bn reais in revenue and a net profit of 3.7bn reais.
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By GlobalDataMarfrig, meanwhile, notched up revenue of 144.2bn reais and net income of 2.8bn reais. Combined revenue and income in dollars amounted to $36.2bn and $1.1bn, respectively.
JBS would still be far bigger in terms of revenue, having posted a top-line result equivalent to $77bn last year. Net profit was $2.6bn.
Under the proposed merger, BRF shareholders, excluding Marfrig, would receive 0.8521 common shares of Marfrig for each common share of BRF held on the closing date.
A merger would result in a “fiscal optimisation” of about 3bn reais based on “net present value”, along with a reduction of expenses estimated at 320m reais a year.
That would come from the “commercial and logistics structure, the consolidation of a single operational system, and the optimisation of the corporate structure”, according to the statement.
After the transaction, BRF would become a wholly-owned subsidiary of Marfrig.
Today’s statement added: “The merger aims to create a global food company based on a multiprotein platform, with a strong presence in both domestic and international markets, portfolio diversification, scale, efficiency, and sustainability, providing significant benefits to both companies, their shareholders, customers, suppliers, employees, and other stakeholders, generating operational, financial, and strategic synergies.
“Additionally, the companies believe that the merger allows for the simplification and optimisation of the administrative and corporate structure of the economic group to which they belong, eliminating or reducing redundant costs, and improving or facilitating access to the capital necessary for the development of their business plans.”
Details of the respective business segments were also provided.
Marfrig is engaged in the slaughter and sale of animal proteins derived from cattle, pigs, goats, sheep, poultry, buffalo and horses, “edible or otherwise”.
It is also involved in the sale and distribution of alcoholic and non-alcoholic beverages, along with activities in agriculture, livestock and forestry.
Similar to Marfrig, BRF processes and supplies meat products but is also involved in the refining and sale of vegetable oils, fats and dairy products, along with animal feed.
A selection of Marfrig’s meat brands includes Viva, Bassi Angus and Montana, while BRF owns the Sadia animal protein line and Qualy dairy products.
Meanwhile, both companies issued first-quarter results today.
Marfrig reported a 27% increase in revenue to 38.6bn reais. Gross profit climbed 21% to 4.6bn reais but net income remained in the red at 1.4bn reais compared to a 1.1bn reais loss a year earlier.
Adjusted EBITDA rose 20.8% to 3.2bn reais to deliver a margin of 8.3% versus 8.7% in the corresponding period.
For BRF, revenue increased 15.9% to 15.5bn reais, with gross profit up 25.8% at 4.05bn reais. Net income surged to 1.2bn reais from 594m reais a year earlier.
Adjusted EBITDA climbed 29.7% to 2.8bn reais, while the margin rose to 17.7% from 15.8%.
