Brazil's Marfrig terminates contract to sell Uruguay plants to Minerva

By Ana Mano

SAO PAULO, Aug 29 (Reuters) - Food processors Minerva BEEF3.SA and Marfrig MRFG3.SA told investors on Friday they disagree over the termination of a contract involving the sale of three beef plants in Uruguay.

Marfrig agreed to sell the Uruguayan assets to Minerva in August 2023 for 675 million reais ($124.51 million).

The deal comes undone at a critical moment for Brazilian beefpackers, who now face a new 50% tariff to sell beef and other products to the United States, making ownership of plants in other countries an advantage.

In a Friday securities filing, Marfrig said it decided to terminate the contract because certain conditions were not met under a 24-month period.

But Minerva, South America's largest beef exporter, disagreed with Marfrig's assessment in a separate securities filing.

Minerva said the contract remains in force, adding it will continue to seek approval from local competition authorities to complete the deal.

However, ranchers and meat sellers in Uruguay requested Uruguay's competition watchdog to block the deal, which effectively happened last year because the acquisition would give Minerva approximately 43% of Uruguay's cattle slaughtering capacity.

Faced with the regulatory obstacles, Minerva proposed "remedies," including a pledge to sell two of the three plants it would have acquired from Marfrig, according to public disclosures.

The Uruguay deal is part of the broader sale of a total of 16 Marfrig slaughterhouses to Minerva for a total value of 7.5 billion reais ($1.38 billion).

Marfrig said the three plants involved in the negotiation continue to operate normally.

($1 = 5.4212 reais)