December 6, 2007

Brazil's Perdigao shares jump 6 percent on Kraft buyout
 

Shares in Brazilian meatpacker and food processor Perdigao S.A. (PDA) rose 6 percent in early trade on the Sao Paulo Stock Exchange, or Bovespa, on Wednesday, following a report in local business daily Valor Economico that Kraft Foods Inc. (KFT) is preparing a bid for control of the company.

The shares remained strong despite denials by Kraft and Perdigao that talks were taking place.

Perdigao shares rose to US$25.66, while Perdigao ADRs were leading gains in New York, up 7 percent to US$51.33.

Valor reported that the US food giant is currently in negotiations with Perdigao's controlling group, which is favorably disposed to the approach, said the report.

But Perdigao management said it had been "surprised" by the Valor Economico report and it was not aware of any bid.

Kraft Foods also denied talks to buy Perdigao.

Brazil is the world's leading chicken and beef exporter, two markets in which Perdigao operates.

Perdigao does not have a single controlling group. But, under a shareholder agreement, a group of seven pension funds -- including Previ, the pension fund for workers of state-run bank Banco do Brasil (BBAS3.BR), and Petros, the fund for workers of state oil firm Petroleo Brasileiro SA (PBR) or Petrobras -- have the power to reject any offer.

Two years ago, local rival Sadia (SDA) launched a hostile bid for Perdigao, which was rejected.

Perdigao has been expanding aggressively of late, making a series of acquisitions. The largest deal came in October when it announced an agreement to buy local rival Eleva Alimentos SA (ELEV3.BR) for approximately US$9.5 hundred million