BRF and Marfrig reportedly enter talks to merge businesses

Two Brazilian food processing companies, BRF and Marfrig, have reportedly begun talks to merge their businesses in order to create one of the largest meat processing companies in the world.

According to Brazilian food conglomerate BRF, it has signed a memorandum of understanding (MoU) with Marfig, where the two firms have entered a 90-day negotiation period to study and define the terms of a potential deal.

BRF and Marfrig declined to comment beyond the securities filings, however, a spokesperson told Reuters that their geographies and portfolios have inspired them to form a global meatpacking giant.

The companies expect a merger to reduce exposure to risk. BRF will reportedly own a majority stake in the combined company.

Headquartered in Sao Paulo, Brazil, Marfrig is a leading Brazilian food processing company. It has an operational base in 22 countries and exports to more than 100 countries.

In January, BRF sold its wholly-owned subsidiary food manufacturer Campo Austral in Argentina.

The Argentinian pork-based manufacturer operates three plants that are located in Florencio Varela, San Andrés de Giles, and Pilar. The plants have the capacity to slaughter 2,300 hogs per day.

They have a processing capacity of approximately 2,144 tonnes per month, including processed and fresh products.

The $35.5m deal comprises the sale of the Florencio Varela facility, as well as all assets and liabilities such as the Bocatti and Calchaquí brands, to Argentinean society BOGS.