Bloomberg News

Brasil Foods Advances to Two-Month High After Deal Approval

July 14, 2011

(Updates with closing prices in second paragraph.)

July 14 (Bloomberg) -- BRF - Brasil Foods SA, the world’s largest poultry exporter, jumped to the highest in two months after analysts boosted stock ratings following Brazilian regulatory approval for its $3.8 billion Sadia SA acquisition.

Brasil Foods rose 1.15 reais, or 4 percent, to 29.70 reais at the close of Sao Paulo trading at 4:15 p.m. New York time, the highest since May 16. The stock surged 9.8 yesterday on the conditional regulatory approval.

The conditions to approve the deal were “much milder than expected,” Banco BTG Pactual SA analysts Fabio Monteiro and Thiago Duarte, who increased the stock’s rating to “buy” from “neutral,” said in a note to clients today.

Brazil’s regulator, known as Cade, ordered the Sao Paulo- based company yesterday to sell some assets and stop using Perdigao, one of its top brands, and the Batavo brand on meat products for as long as five years.

As part of the accord, Brasil Foods will also have to sell 10 food-processing plants, 12 other brands, eight distribution centers and four pork and chicken slaughterhouses. The suspension and divestitures will affect 13 percent of the company’s operating revenue and 12 percent of its sales volumes, Brasil Foods said yesterday in a regulatory filing.

The world’s largest poultry exporter was raised to “outperform” from “neutral” by Credit Suisse Group AG analyst Marcel de Moraes today. Raymond James equity analyst Daniela Bretthauer raised the rating to “market perform” from “underperform” yesterday.

--With assistance from Ney Hayashi in São Paulo. Editors: Robin Saponar, Carlos Caminada.

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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