Merger between Marfrig and BRF gives rise to MBRF
The new company is based on a truly multiprotein platform, with iconic brands and an integrated portfolio, with 38% of sales volume coming from high value-added processed products. This move strengthens their global presence, enhances strategic, operational, and tax synergies, and solidifies their leadership position in the various markets in which they operate, leveraging competitive advantages and generating value. Together, the companies have consolidated net revenue of BRL 152 billion over the past 12 months and hold 38% of the processed product portfolio.
The transaction provides for the incorporation of BRF shares by Marfrig at an exchange ratio of 0.8521 Marfrig share for each BRF share held, already considering the maximum dividend distribution by the companies: BRL 2.5 billion by Marfrig and BRL 3.5 billion by BRF. As part of the deal, the operation foresees that BRF and Marfrig shareholders will benefit from a significant dividend payment. BRF will distribute up to BRL 3.52 billion in dividends and Marfrig, in turn, will distribute BRL 2.5 billion.
"The merger between Marfrig and BRF is a necessary move for us to advance in capturing strategic synergies and continue growing our business worldwide. Today, with MBRF, we are starting a new chapter in our history and paving the way for a promising future", says Marcos Molina, Controller and Chairman of the Boards of Directors of Marfrig and BRF.
Over the past three years, BRF has consistently advanced in process excellence, continuous improvement of its operations and execution, focusing on growth and profitability. At Marfrig, operational excellence is also evident, along with significant growth in branded high value-added products and a consistent strategy of industrial complexes-factors that have led to substantial profitability gains.
The companies have already extracted all possible synergies to date. For the next stage of additional synergies, the business combination is essential. The mutual understanding between Marfrig and BRF provides a clear view of existing opportunities and reduces execution risk. The synergies already mapped out total BRL 805 million per year, with between BRL 400 and 500 million expected within the first 12 months and the remainder in the medium and long term.
On the revenue and cost front, through cross-selling initiatives and supply chain synergies, the expectation is to reach BRL 485 million per year. Annual cost reductions are estimated at approximately BRL 320 million, through initiatives such as unifying the commercial and logistics structure, consolidating a single operating system, and optimizing the corporate structure.
In accordance with current tax regulations, the company may also benefit from tax optimization, such as accelerating the monetization of tax credits at the federal and state levels. Based on current estimates, this front is expected to generate BRL 3 billion in present value.
The operation also presents an opportunity in North America, which considers the possibility of redomiciliation. This brings significant advantages, such as high liquidity in the North American market, access to more attractive capital costs, and potential revaluation of the companies’ multiples.
"Our shared values will be the foundation for continuing our growth trajectory. By maintaining financial discipline and our focus on value-added products, I am confident we are beginning a new chapter of success with MBRF. We will continue to generate even more value for our shareholders, partners, customers, consumers, employees, and society", concludes Marcos Molina.
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