Bloomberg News

Brasil Foods Sinks Before Brazil Antitrust Ruling on Merger

June 08, 2011

June 8 (Bloomberg) -- BRF - Brasil Foods SA, the world’s largest poultry exporter, dropped to the lowest in four months and is leading losses in the Bovespa index amid concerns Brazil’s antitrust regulator will add restrictions to approve the planned acquisition of Sadia SA.

Brasil Foods fell 1.11 reais, or 4 percent, to 26.79 reais at 12:13 p.m. in Sao Paulo trading, the lowest since Feb. 15, after earlier dropping as much as 4.3 percent.

“There are concerns Brasil Foods may be forced to sell or license brands,” Max Bueno, an analyst with Spinelli Corretora, said in a telephone interview from Sao Paulo today. He rates the stock “hold.”

Brazil’s antitrust agency, known as Cade, will vote today on the $3.81 billion purchase of Sadia by Brasil Foods, formerly known as Perdigao SA. Brasil Foods must allow competition by a third company and may also have to share gains with customers, Cade’s attorney general said in a May 10 report.

The transaction that created Sao Paulo-based Brasil Foods in July 2009 is the second-largest among 166 industry deals totaling $24.2 billion worldwide since that year, according to data compiled by Bloomberg. Brazilian beef producer JBS SA’s September 2009 purchase of Bertin SA is the largest at $6.31 billion, the data show.

Cade earlier today rejected a proposal to delay the vote.

--With assistance from Iuri Dantas in Brasilia. Editors: Robin Saponar, Dale Crofts.

To contact the reporter on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net.

To contact the editor responsible for this story: Dale Crofts at dcrofts@bloomberg.net.


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