Brazil-Meat merger set for June.
BRAZIL-MEAT MERGER LOOKS LIKELY.
Sadia SA, Brazil’s second- largest foodmaker, expects a decision on merger talks with competitor Perdigao SA by June, Chairman Luiz Furlan said.
Sadia shareholders are discussing the possible structure of a new company, Furlan told reporters today in Sao Paulo. The stock reversed losses after his remarks, rising 1.7 percent to 3.06 reais in Sao Paulo trading.
"By June, there will be a conclusion," Furlan said. "The shareholders are seeking a bigger company that will value the strongest brand."
Perdigao said March 17 it didn’t come to an agreement with Sadia on a possible "association" with the company after holding talks. Sadia, which posted a fourth-quarter net loss of 2.04 billion reais ($890 million) because of charges related to wrong-way bets on the Brazilian currency, said in a similar statement it had discussions on partnerships with "many" companies, including Perdigao.
"Seeing what they reported in terms of losses from currency derivatives, they’re going to need to find a way out," Patricia Branco, who helps manage $630 million at Global Equity Administradora de Recursos in Rio de Janeiro, said in an interview. "The talks may even be resolved before June if they can find the right price."
Facing Pressure
Sadia faces pressure to merge with Perdigao as debt payments loom, according to Credit Suisse Group AG. The Concordia, Brazil-based foodmaker has 3.5 billion reais in short-term debt, with "most" due in the third quarter, analyst Marcel Moraes wrote March 17. The company may seek financing from Brazil’s national development bank, known as BNDES, which may ask it to combine with Perdigao, he wrote.
Sadia abandoned a 3.9 billion-reais bid to take over Perdigao in 2006. Perdigao overtook Sadia as Brazil’s biggest food company after agreeing to buy 77.3 percent of Eleva Alimentos SA in October 2007.
The acquisition followed Perdigao’s purchase of margarine brands from Unilever NV in Brazil and a Dutch meat-processing unit of Cebeco Groep BV earlier that year.
Perdigao fell 4.9 percent to 28.59 reais.
