Brazil’s Securities and Exchange Commission (CVM) has postponed the shareholder vote on meatpacker Marfrig’s acquisition of poultry and pork processor BRF, according to a joint market statement released by both companies last week.
Shareholders of both firms were set to vote on an agreement announced in May, which would allow Marfrig — already a majority stakeholder in BRF — to complete the acquisition through a share swap, resulting in the creation of a global company named MBRF.
According to a document published on the CVM’s website, the regulator decided to postpone the assembly for 21 days following a request by minority shareholders, who argued they need more information to understand the valuation criteria for each company and the proposed exchange ratio in the deal.
Some funds are voicing dissatisfaction with the proposed terms, said Igor Guedes, equity analyst at Genial Investimentos, who added that nearly half of the remote votes on the plan were abstentions.
"Probably, a significant portion of the abstentions is tied to the perception among BRF minority shareholders that the merger creates financial value, but even so, the proposed exchange ratio would have been unfair," Guedes explained.
"We understand the discomfort among BRF’s minority shareholders," said Leonardo Alencar, equity analyst at XP Investimentos. Although the CVM has proposed a 21-day delay, Alencar believes the proposed terms of the agreement will not change and that the deal will be approved. In their joint statement, BRF and Marfrig said the regulator requested additional information from both companies regarding the proposed merger. The companies had previously noted that the acquisition was subject to various approvals, including that of the minority shareholders.
