BRF and Marfrig reveal partnership discussions

31-May-2019 - Last updated on 31-May-2019 at 10:35 GMT

South American meat processors BRF and Marfrig Global Foods have revealed they are in talks for a potential partnership.

In securities filing released by BRF and Marfrig, it revealed that the two businesses are exploring the potential for joining forces, which would create an entity with a combined revenue of R$17.4bn according to their Q1 results.

It is believed that if the two businesses enter into partnership, of which BRF would own 85% of the equity, it would raise the combined company to a “leadership position in the markets in which it will operate”.

Both businesses believe the partnership will reduce exposure to sector risks and generate synergies due to the balance and complementarity of products, services and geographic diversification, with a material presence in Brazil, the United States, Latin America, the Middle East, and Asia.

No structure what the combined business would look like has been revealed and the talks can go for 90 days, with the potential for a 30-day extension.

The two businesses had previously done business with Marfrig acquiring BRF’s Argentine division Quickfood and two of its Brazilian facilities back in December 2018.

BRF underwent a tough 2018, suffering a net loss of R$4.46bn for the year which management attributed to difficult import markets, cost pressures and a truck drivers’ strike.

Marfrig also recently acquired a majority stake in US beef processor Iowa Premium in March as part of its “commitment to sustainable growth” as well as “increase interest in North America”.