Brazil's Marfrig moves to cap takeover of BRF, combining as MBRF

By Ana Mano

SAO PAULO, May 15 (Reuters) - Brazilian beef processor Marfrig MRFG3.SA announced on Thursday a plan to complete its takeover of poultry and pork processor BRF BRFS3.SA, while teasing plans to eventually list shares of the combined entity in the United States.

The move caps a long-running strategy by Marfrig, which already owns just over 50% of BRF, gaining scale to compete with Brazilian meatpacking giant JBS JBSS3.SA, which is nearing a move to list its shares in New York. All three firms are now listed in Sao Paulo.

In public disclosures, Marfrig and BRF said the proposed deal would involve a share swap whereby BRF shareholders would receive 0.8521 shares of Marfrig for each BRF share they own.

The move also entails creation of a company to be called MBRF, which will also control Marfrig-owned National Beef, a meat processor based in the United States that will also be integrated into the new corporate structure.

In a joint statement, the companies said they expected 805 million reais ($142 million) of annual synergies from the tie-up, with 400 million to 500 million reais captured in the first year. Shareholders are set to vote June 18 on the proposal.

Executives at BRF told analysts the move is aimed at building on both companies' strengths, giving them more power to compete with giant food producers on the global stage.

CFO Fabio Mariano said MBRF could move its fiscal domicile and list shares in New York at some point. First, he said the merging companies need to focus on extracting "synergies" from the new structure.

In May 2021, Marfrig bought almost a quarter of BRF's shares, becoming then its top shareholder, but saying at the time it would remain a passive shareholder. Gradually, Marfrig increased its stake in the company to the current 50.49%.

The companies had combined net sales of 152 billion reais ($26.75 billion) in the last 12 months, with 38% coming from processed food products with a higher value.

Shares of both companies rose in Sao Paulo trading on Thursday, outperforming sector peers including Minerva BEEF3.SA and JBS.

BRF's shares closed 4.78% higher at 20.62 reais, but at one point in the session rose over 7%. Marfrig was up by 4.34% to 20.66 reais.

($1 = 5.6817 reais)