BRF and Marfrig said in a statement that their respective boards approved a memorandum that provides exclusivity in the negotiations for 90 days, during which neither company can negotiate with third parties. BRF is the leading chicken and pork producer in Brazil, while Marfrig is a world leader in the beef segment, only behind JBS. According to the companies, a merger would result in “operational and financial” synergies, and that they complement each other in products, services and geographic diversification.

However, upon the announcement, BRF’s shares fell 4.52% while that of Marfrig rose 0.74%. Some analysts remain sceptical of the deal and say the new company would have limited gains in synergy and access to more markets. Also, given the size of both companies, a merger would be a complex operation. “Financial logic seems greater than operational logic for a combination”, said a report by Goldman Sachs.

Sources: G1/Bloomberg