Bloomberg News

Brasil Foods Short Sellers Increase Bets on Antitrust

June 17, 2011

(Corrects third paragraph of story originally published June 10 to show that two commissioners raised objections to the Brasil Foods merger.)

June 10 (Bloomberg) -- Bearish bets against BRF - Brasil Foods SA, the world’s largest poultry exporter, rose the most in a month on the Bovespa stock exchange after two of Brazil’s antitrust commissioners said the acquisition of Sadia SA should be blocked.

The value of Brasil Foods shares on loan in Sao Paulo increased to 318.99 million reais ($200 million) yesterday, the highest since April 28, when Russia announced a ban on meat imports from Brazil, according to the latest data from BM&FBovespa SA’s clearing and depositary house website.

Brasil Foods shares rose 0.8 percent to 25.50 reais at 11:42 a.m. New York time. The stock fell to the lowest in more than six months yesterday after Carlos Ragazzo, one of five commissioners with Cade, as Brazil’s antitrust agency is known, said the $3.8 billion acquisition of Sadia should be blocked as it doesn’t benefit consumers. Ragazzo said June 8 that Brasil Foods has too much market share. A second commissioner also voiced objections to the deal before the session was postponed for June 15.

The amount of shares on loan show that traders have increased bets that the stock will fall. In a short sale, a trader borrows shares and sells them. If the price drops, the trader profits by buying back the stock at a lower price, repaying the loan and pocketing the difference.

--Editors: Brendan Walsh, Richard Richtmyer

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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