Investors Are Skeptical About Brazil’s Big BRF-Marfrig Deal

The surprising announcement that Brazil chicken producer BRF SA is in talks to take over beef giant Marfrig Global Foods SA was met with mixed responses from analysts. Investors didn’t seem too excited either, with moves on the stocks somewhat muted as the expected reduction in the debt burden at the resulting company is met with uncertainties about scale gains and corporate governance, Bloomberg News reported. BRF fell 1.2% at 11:23 a.m. in Sao Paulo, while Marfrig rose 3.1%. Competitor JBS SA dropped 2.8%. The all-stock transaction would increase BRF’s geographic and product diversification and allow the firm to reduce leverage, a key investor concern. Still, there are doubts on the control structure of the new company and how much it will be able to extract in terms of synergies. Read more

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