Marfrig and BRF announce merger to create MBRF Global Foods Company

Marfrig and BRF announced to the market on Thursday, the 15th, the signing of a protocol that provides for the incorporation of all BRF shares by Marfrig, in a transaction that could consolidate one of the largest global companies in the food sector, with a strong presence in proteins. With the transaction, BRF will become a wholly owned subsidiary of Marfrig, which will continue to be listed on the Novo Mercado of B3. As part of the restructuring, Marfrig also proposed changing its corporate name to MBRF Global Foods Company SA, a name that reflects the integration between the two companies.

The proposal, formalized through the "Protocol and Justification for the Incorporation of Shares Issued by BRF by Marfrig Global Foods", provides that BRF shareholders (except Marfrig itself) will receive 0.8521 common shares of Marfrig for each 1 share of BRF. The value of the exchange ratio was negotiated by independent committees, advised by institutions such as Citigroup, and took into account multiple criteria, including fair value and expected synergies.

The extraordinary general meetings of the two companies, at which the proposal will be voted on, have been called for June 18. Approval of the transaction is subject to the absence of relevant adverse events that could affect the production capacity of the companies, such as wars, natural disasters or health crises.

The operation, presented as strategic, aims to create a multiprotein platform with a significant presence in both the domestic and international markets. Significant gains in scale, efficiency and diversification are expected. According to the data released, the companies estimate synergies of around R$485 million per year in increased revenues and reduced costs, R$320 million per year in operating expenses and R$3 billion in tax gains at net present value.

In addition to optimizing administrative structures and expanding investment capacity, the operation should also strengthen the brands' presence in markets such as Brazil and Middle Eastern countries (Halal), expanding distribution channels.

The estimated costs of the transaction are R$24 million, including legal and financial advisory services, audits and publications. There will be no issuance of shares corresponding to the BRF shares held in treasury, which will be canceled before the closing date.

The proposal also allows dissenting shareholders to exercise their right to withdraw — those who did not vote in favor of the merger and held their shares since the date of disclosure of the material fact. BRF shareholders will be able to opt for a refund of R$9.43 per share (based on net equity) or R$19.89 per share (according to the report provided for in article 264 of the Corporations Law). In the case of Marfrig, the amount is R$3.32 per share.

If the exercise of the right of withdrawal compromises the financial stability of any of the companies, there is a possibility of calling a new meeting to reassess or cancel the operation.

'Right time'

Marfrig founder and chairman Marcos Molina said the decision to incorporate BRF comes at the right time to unlock synergies between the two companies. "We never said it was necessary. We always said it would be something natural, one day," Molina said, when answering journalists about the change in position regarding the merger of operations.

According to the executive, the initial focus was on the operation of the two companies separately. "Both companies were focused on the operational side, and this continues to be a priority," he said. However, with the conclusion of the BRF+ and Marfrig+ integration programs, and the creation of the joint MBRF+ program, the synergies began to be mapped out.

"We have now reached a point where we need to address what we call the 'fine grain', which requires simplifying the structure and having a single, multi-protein company," explained Molina. He stressed that this merger will allow for approximately R$800 million in synergies. "If it takes longer, the two companies will continue to lose these synergies."