October 19, 2007

Brazil's Perdigao in merger talks with Eleva

Perdigao SA, the second largest poultry and pork producer, announced it is in potential merger talks with Eleva Alimentos, a local competitor. 

In a joint statement to the Brazilian Securities and Exchange Commission, the companies announced that the "eventual merger of the operations of Eleva and Perdigao is being examined" and that the "ownership and operational structure will be communicated to the shareholders and the market as soon as it has been decided upon."

Perdigao acquired the beef plant and other assets of  Valore Participacoes for R$100 million  and expanded its capacity from 500 heads/ day to 2000 heads/day.

In May, it announced at 45 percent on-year increase in first quarter sales to R$1.8 billion. 

In July Sadia, the largest meat processor, launched a takeover bid for Perdigao, offering US$1.76 billion. The deal would have created the world's fourth largest meat company behind the US's Tyson Foods, Smithfield Foods and Pilgrim's Pride.

However, Nildemar Secches, Perdigao's president, however, called the 27.88 reais (US$ 12,61) per share offer "extremely low" and the deal was scuttled.

As Eleva also has a dairy segment, the merger, if it goes through, would give Perdigao access to the dairy market. 

Eleva produces, import and export grains meat and dairy products with distribution centres in Rio Grande do Sul,

Mato Grosso do Sul and four other states.  Its 2006 sales were US$1.86 billion and it has 8,600 employees. Perdigao's revenues last year was US$2.4 billion and hires close to 40,000 employees.