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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.

Mercopress

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  • Show Comments (15)

  • dnbaiacu

    Joao
    Yea,, most of us are going to have to make big adjustments right away if we want our incomes chipped away at less. That’s why it is so critical to pay attention to the game. ( I hate to call it that) .
    It is amazing how fast things are changing. I can hardly keep up as I am scrabbling to keep ahead of a dollar destined to crash. And thank God for the internet. If it weren’t for that we’d really all be clueless here in the States 😀 🙁

  • dnbaiacu

    Joao
    I am observing the above comments and I am wondering if many recognize what is happening.. I guess fast-forwarding doesn’t make much sense in the bigger picture. But current awareness is crucial.
    Cartel-like monopolies. Increased government backed “social programs”. Bank mergers. Lower interest rates for borrowing yet higher consumer prices.????? 🙁 🙁

    It doesn’t take a scientist to figure out what is going on.
    All very exciting to watch. 🙂 🙁 🙂 🙁

  • Joao da Silva

    [quote]What’s next…detergent pack mergers!!!!!!!!!!!!!! [/quote]

    It is a possibility,as long as degree certificates are distributed by the new Cartel! 😉 🙁 🙁 😥

  • jon

    What’s next…detergent pack mergers!!!!!!!!!!!!!! 😉 😉

  • ch.c.

    “I for one will not be buying their mass produced tasteless apologies…….. ”
    Lets face it…….what is the Brazilian product that is worldwide acclaimed for its quality ??????

    Let me be quite clear and specific :
    95 % of Brazilian Coffee is NOT recognized as a good and premium quality.
    Simple as that.

  • ch.c.

    Oi/Telekom story
    Welll this is called…..BRAZILIAN EFFICIENCY AND PRODUCTIVITY !!!!!!

    Just imagine the Brazilian Unemployment rate if the efficiency was…. higher !!!!!!
    It would skyrocket. No doubt.

    The same could be said for your World Reknown Bureaucracy Efficiency.
    No doubt the more bureaucracy with the least efficiency creates millions of jobs.

    Simple Facts & Sad Reality as per the World Ranking of Doing Business :

    In Brazil a small size enterprise needs 2400 hours per year to fill & figure out the various taxes.
    Brazil ranked 2nd…. WORLD WORST.
    Generally speaking similar size companies in many many many countries, the companies need around 50 hours !
    In some countries it even falls down to below 30 hours.
    Yesssssss….2400 hours against 30-50 hours !!!! stats available online for free.
    Once again just imagine your unemployment rate if you would be JUST AVERAGELY COMPETITIVE !!!!!
    I did not say if you were good….but just average.

    Just think about it….of how Robing Hook and his predecessors have created millions and millions of UNNECESSARY, INNEFICIENT AND UNPRODUCTIVE JOBS !!!!

    Viva Brazil the society with the World Largest & Deepest…NAVEL…that you cultivate so preciously.
    Your brains are telling you…WHY MAKE IT SIMPLE AND EFFICIENT WHEN YOU CAN DO IT COMPLICATED AND TOTALLY INNEFICIENT !

    😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉 😀 😉

  • DU 48

    Anti-trust regulators
    There are 3 organs in Brazil which will be investigating the merger- one of them is Cade, Conselho Administrativo de Defesa Economico.(O poder da Brasil Foods. opiniao- estadao 22 maio).
    Hopefully Idec -Instituto de Defesa do Consumidor- (Brazilian Intitute for Consumer Defense) will have some say in the matter.
    Remember the merger between Garoto and Nestle didn’t go through…

  • Joao da Silva

    [quote]Fingers crossed the anti-trust regulators will act in favor of the consumer[/quote]

    Are there any anti-trust regulators in our country? 🙁

  • DU 48

    Poultry, Pork and Pasta -the taste,or the lack of it, is yet to come….
    Sadia made its first annual loss (US$406m) in March due to currency trading in derivatives – speculation in other words, and also a first quarter net loss this year.The loss was greater than the total profits of 2007.
    Perdigao also made a first quarter loss due to a tax loss on its Perdigao Agroindustrial subsidiary.(fwi.co.uk)
    Although BrasilFoods co-chairman Louis Furlan promised that cost savings would be passed on to consumers, analysts say the merger will make it more difficult for new competitors to enter the market .
    Brazil’s National Development Bank, BNDES,is going to buy shares in the company- to keep prices low for BR consumers!
    So that’s it, then. Market monopoly sponsored by the tax payer and less choice.
    Fingers crossed the anti-trust regulators will act in favor of the consumer.In case they don’t, I for one will not be buying their mass produced tasteless apologies for chicken.
    Farmers markets, local produce and healthy animals: these are some of the priorities which are already becoming practical alternatives to the globalised food industry.

  • Joao da Silva

    Dnbaiacu
    [quote]I am observing the above comments and I am wondering if many recognize what is happening.. I guess fast-forwarding doesn’t make much sense in the bigger picture. But current awareness is crucial.
    Cartel-like monopolies[/quote]

    In reality, very few people are aware what is going on, Dnb. But nothing much can be done by people like us to prevent the Cartels being formed in every sector of the economy. The original idea of selling TELEBRAS was to open up competition in the Telecom sector. Instead we ended up having a private monopoly and paying higher prices for a poorer quality of service as described by Jakob. The same thing is going to happen in the food industry. Do you know that the new company Perdigao/Sadia is going to be named Brasil Foods? In a couple of years, it is going to buy out all the small companies.As I keep on saying, we the domestic consumers will continue to subsidize the exports. 😥

    May be our eminent fellow blogger ch.c has something more to say about this issue. 😉 😀

  • jakob

    Yep
    As for Oi/Telekom, I agree 100%. Their customer service is now the worst in the universe, hands down. I bought a banda larga package from them in 2006, and when they installed it, it didn’t work. So I called customer support, to have it fixed. Long story short, after six (6) visits of various motley crews (once a “team” of three 20-somethings arrived, with no laptop for testing, and with no idea why they are here so I had to explain to them all over again, and because it was Friday afternoon they said to me and my wife that “we can’t help you, besides it’s Friday and it’s too late and we want to go home” – !!!), they still weren’t able to activate my Internet connection! I said “fuck it”, let’s move to another company.

    As for Sadia/Perdigao, I noted that when you want to buy any quality food (for example ham/presunto) in Brazil, it always boils down to these two companies. Sadia products always looked and tasted a little bit better, but Perdigao wasn’t far behind. In any case, you had a choice. But now, what? With this merger, we have a cartel which is effectively able to control prices.

  • Joao da Silva

    [quote]This is extremely bad for Brazilian customers. This merged company has all the hallmarks of a monopoly, and has the word CARTEL written all over it, in bright neon gigantic letters.[/quote]

    I have to agree. First Perdigao bought Batavo and now it is merging with Sadia to create a private[i]monopoly[/i]. Anyone who is keeping track of the increase of prices of food products manufactured by these two [i]Giants[/i] will agree that it is a bad omen for Brasilians. Of course this [i]merger[/i] is no different from that of Oi/Brasil Telecom. The Brasilian consumers always get screwed. 😥

  • ch.c.

    “The merger creates a global food powerhouse with combined annual revenue of US$ 10.6 billion, 42 plants ”
    Whoaaaaaaaa !!!!!!!!
    NestlÀƒ© is a US$ 100 billion sales company. With 27 plants…IN BRAZIL ALONE !!!!!!!

    😉 😀 😉

  • sage

    ja-kabob
    very stupid logic. and what about tyson – i suppose good for u.s. customers….

  • jakob

    This is bad
    This is extremely bad for Brazilian customers. This merged company has all the hallmarks of a monopoly, and has the word CARTEL written all over it, in bright neon gigantic letters. The Brazilian government is allegedly backing this deal? Curious, to say the least. If it goes through, expect higher food prices real soon.

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