Fontanas question fairness of equity swap terms and independence of parties pricing transaction.
The Fontana family, descendants of the founder of Brazilian food giant Sadia and holders of about 3% of BRF (Brasil Foods), are challenging the proposed merger between BRF and Marfrig. While they support the deal’s strategic logic, they argue the share exchange ratio — 0.8521 Marfrig shares per BRF share — is unfair and undervalues BRF by around 16%.
On May 15, Brazilian food industry giants Marfrig and BRF announced plans to merge into a single super-giant company, MBRF. BRF was founded in 1934 and is currently one of the largest producers of meat and meat products, as well as processed food products. Marfrig, founded in 1986, also has a strong position in the meat industry and is known for its high-quality products.
Adriano Fontana cites historical valuation data and Marfrig’s significantly higher debt levels as key concerns. He believes a fair ratio should fall between 1.34 and 1.83. He also questions the independence of the committee that evaluated the deal, claiming its members have long-standing ties to Marfrig leadership.
Fontana warns the transaction could set a dangerous precedent by using formal procedures to legitimize a deal that he sees as a misuse of control. The family is mobilizing other shareholders to demand a reassessment.
Moody’s has given a positive assessment of the financial results of the planned Marfrig-BRF merger.
Marfrig has not commented on the issue.
Source: Valor International
