Merger between Marfrig and BRF creates Brazil’s seventh largest company

Marfrig and BRF announced last Thursday afternoon the merger of their operations, creating a new company with capital of R$ 153 billion (around US$ 27 billion) and expected annual synergies of at least R$ 800 million (roughly US$ 140 million).

“After three years of Marfrig leading BRF, a period in which BRF returned to generating value for shareholders, this merger is a natural step in the companies’ future. The merger will allow us to grow in scale and diversify, and MBRF Global Foods Company (the new company) is now positioned as the seventh largest company in Brazil, with revenues of R$ 153 billion,” said Marfrig CEO Marcos Molina. National Beef will also be part of this new company.

During the press conference, Molina highlighted the revenue and cost advantages of the deal, which would result in an annual reduction of R$ 485 million and R$ 320 million in expenses. This would bring a total EBITDA impact of R$ 805 million per year. Regarding taxes, the projected impact is R$ 3 billion in NPV (Net Present Value).

Marfrig and BRF are scheduled to meet on June 18 to approve the agreement, with the transaction closing initially planned for July 28. The post-merger ownership structure of MBRF will be as follows:

• Controlling shareholders – Marfrig: 41.5%

• Other shareholders – Marfrig: 15.6%

• SALIC: 10.6%

• Other shareholders – BRF: 32.3%

Regarding the share exchange ratio, each BRF share will entitle the holder to receive 0.8521 Marfrig shares. BRF is currently valued at R$ 34.6 billion on the stock exchange and Marfrig at R$ 17.7 billion.

Molina also mentioned that another plan for the combined company is to move MBRF’s headquarters to the United States, along with its stock listing, following the same strategy recently adopted by JBS. “This would give us access to a broader and more liquid capital market, where multiples are higher, and would reduce our debt service costs,” he said. “But that’s a step we’ll take in the future.” The initial focus will be on capturing synergies.

According to Molina, the company’s growth will be driven by Marfrig, BRF and U.S.-based National Beef, with operations in the U.S., the Middle East and China. Of MBRF’s total revenue, 43% will come from the U.S. market.