Brazilian New Food Giant’s Goal: Conquer the Planet

Sadia and Perdigão products at the supermarket Sadia and Perdigão, Brazil's two biggest food companies announced on Tuesday, May 19, plans to merge, creating an exporting powerhouse in a stock swap deal prompted by the global financial crisis. Executives from Perdigão SA and Sadia SA said they expect their new enterprise, to be called Brasil Foods SA, to become the world's top exporter of processed meat and chicken.

The merger creates a global food powerhouse with combined annual revenue of US$ 10.6 billion, 42 plants and a workforce of 119.000. The two were already Brazil's leading chicken and frozen food producers.

The deal is subject to regulatory approval in Brazil and Europe, a top market for Brazilian exports such as chicken. Analysts predict Brazil's government will quickly back it amid a broader push to boost large companies hurt by the economic downturn.

"We have a planet to conquer," Perdigão chief executive Nildemar Secches told reporters.

Perdigão will control 68% of the new enterprise and Sadia will have a 32% stake, Secches said. It will also look to raise as much as US$ 1.9 billion in a public offering of new shares by July, he added.

Sadia sought a partner after losing nearly US$ 400 million on bad currency bets as Brazil's Real dropped last year. Those losses surpassed the company's 2007 profits.

The new company will dominate many areas of Brazilian food sales, including frozen and processed meat products, margarine and pizza. Brazil's largest newspaper, Folha de S. Paulo, meanwhile predicted that its sales abroad will reach US$ 4.8 billion.

Luiz Furlan led Sadia for a decade before serving as trade and industry minister in Brazilian President Luiz Inácio Lula da Silva's administration. He resigned in 2007 and returned to Sadia last October as the financial crisis worsened.

He and Secches will share the chief executive post at the new company for two years.




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