Brazilian Beef Baron Makes Push to Assert Control Over BRF
(Bloomberg) -- Marcos Molina dos Santos, the Brazilian beef baron who founded Marfrig Global Foods SA, renewed his push into chicken giant BRF SA, leaving the global food market one step closer to a potential merger.
BRF’s board approved Marfrig’s suggestion of making Molina its chairman, the company said in a filing Tuesday. The appointment still has to be cleared by shareholders, who could propose an alternative board for voting. But that’s unlikely as all BRF shareholders are fully aligned, according to its Chief Executive Officer Lorival Luz.
“We see a huge alignment among all shareholders when it comes to what BRF has been doing and our strategy,” Luz told reporters Wednesday during an earnings call. “I’m absolutely not worried regarding the company’s governance.”
Molina’s appointment as chairman was one of 10 made by Marfrig for BRF’s board. The names proposed also include Sergio Rial, who served as chief executive officer at Marfrig and the Brazilian unit of Banco Santander SA, where he remains as chairman of the board.
Marfrig, which has been working to raise processed food sales, has boosted its stake in BRF to 33.25% over the past months, fueling speculation of a merger that would create the world’s third-largest meat company by market value. If Marfrig crosses the 33.3% threshold, a so-called poison pill clause would be triggered, forcing the beef giant to launch a tender offer for the acquisition of the remaining stake at higher premium.
Molina, who also acts as chairman of the meatpacker he founded, has repeatedly said Marfrig’s investment in BRF is passive, but industry watchers say a merger is the most likely scenario. The companies had negotiated a deal in 2019, but failed to agree on governance of the combined entity.
On Monday, Marfrig’s board said in a filing it decided to exercise its shareholder rights to start influencing BRF’s management.
“We don’t think Marfrig’s stake in BRF is purely a financial investment,” Santander analyst Rodrigo Almeida wrote in a report. “A share-swap merger between Marfrig and BRF is the most reasonable outcome.”
Shareholders will vote on the appointments in a March 28 meeting.
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