Jun 9, 2011


Brasil Foods incurs massive losses



Brasil Foods SA (BRFS3), the world’s biggest poultry exporter, plummeted to the lowest in four months and is leading losses in the Bovespa index, thus, bringing about concerns that Brazil’s antitrust regulator will add constraints to approve the intended acquisition of Sadia SA.


Brasil Foods decreased by BRL1.11 (US$0.70) or 4% to BRL26.79 (US$16.93) in Sao Paulo trading, the lowest since February 15, after dropping as much as 4.3% previously.


“There are concerns that Brasil Foods may be forced to sell or license brands,” an analyst said. He rated the stock hold.


Brazil’s antitrust agency, Cade, voted yesterday (Jun 8) on the US$3.81 billion purchase of Sadia by Brasil Foods, formerly known as Perdigao SA. Brasil Foods must allow competition by a third company and may also have to share gains with customers, Cade’s attorney general said in a May 10 report.


The transaction that created Sao Paulo-based Brasil Foods in July 2009 is the second-largest among 166 industry deals totalling US$24.2 billion worldwide since that year, according to data compiled by Bloomberg. Brazilian beef producer JBS SA’s September 2009 purchase of Bertin SA is the largest at US$6.31 billion, the data show.

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