Bloomberg News

Brasil Foods Suspended on Bovespa Ahead of Antitrust Ruling

July 13, 2011

(Updates with New York suspension in first paragraph, Cade proposal in fourth paragraph.)

July 13 (Bloomberg) -- BRF - Brasil Foods SA shares were suspended in Sao Paulo and New York trading until Brazil’s antitrust regulator rules on the company’s $3.8 billion acquisition of Sadia SA. The company proposed selling some assets and suspending its top brand in a bid to win approval.

The regulator, known as Cade, is set to vote today on the deal that created Brazil’s biggest maker of TV dinners and frozen meat products. Commissioner Carlos Ragazzo voted against the deal on June 8, saying the combined company held too much market power and may hurt consumers. The vote caused the shares to tumble 6.3 percent that day.

“The shares are being priced in light of restrictions to be imposed by Cade, such as the sale of minor brands and some plants,” Caue Pinheiro, an analyst with SLW Corretora, said in a telephone interview today. “Anything more severe than that, like the sale of the Perdigao brand, would probably weigh on the shares.”

Under the proposal being considered by Cade today, Brasil Foods would suspend the use of its top brand Perdigao on some products for three to five years as well as the Batavo brand on all meat products for four years. The proposal also includes selling 10 food-processing plants, eight distribution centers and the Doriana, Delicata, Rezende and Wilson brands, Cade Commissioner Ricardo Ruiz said today at the meeting in Brasilia.

The company, formerly known as Perdigao, bought Sadia SA in 2009 after the bigger rival booked more than 3 billion reais in wrong-way currency bets. Brasil Foods rose 2.2 percent to close at 26.01 reais yesterday in Sao Paulo trading. The stock has fallen 4.9 percent this year, less than the 14 percent drop for the Bovespa index.

--With assistance from Francisco Marcelino in Sao Paulo and Arnaldo Galvao in Brasilia Newsroom. Editors: Jessica Brice, Robin Saponar

To contact the reporters on this story: Lucia Kassai in Sao Paulo at lkassai@bloomberg.net; Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: Jessica Brice at jbrice1@bloomberg.net


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