There was a time when Brazil-based Marfrig Global Foods was a significant player in the global poultry industry. It could be again.
When Marfrig sold Moy Park to JBS in 2015 and Keystone Foods to Tyson Foods in 2018, it essentially exited the industry, citing the desire to focus further on its beef operations.
But that absence from the poultry industry, for all intents and purposes, didn’t last long.
Merger talks between the two companies began in earnest in 2019, but both parties disclosed about two months later that such a merger wouldn’t happen. At least for the time being.
In 2021, Marfrig Global Foods invested in BRF, which is the second largest poultry producer in Brazil and the third largest in the world. After that initial investment, the association between the two companies has greatly increased.
Marfrig’s stake in BRF rose from 24.23% to 33.25%, and more interestingly, Marcos Antonio Molina dos Santos, chairman of Marfrig Global Foods, was also elected as the chairman of BRF.
Obviously, when that happened, people instantly started thinking that a merger would eventually occur.
And after months of very limited comments on the matter, during a recent interview with Bloomberg, the chairman of both companies addressed questions related to a possible merger.
He said for the time being, it doesn’t make sense to combine what dos Santos refers to as the sister companies. BRF has been underperforming during recent fiscal quarters, and turning that company around is the higher priority.
“The first thing is fixing (BRF),” he said. “After that, there are strategic movements that we can do in the future.”
But the shared synergies between the two Brazil-based companies were estimated to about BRL1 billion, they learned during the earlier merger talks.
“Both companies have a lot of synergies, but, at the moment, each one is focused on its business,” he said. “But now, the most important thing is not taking the focus away from each company. This year, each one will keep focused on its operations.”
With that information now out in the open, it will be interesting to see what happens next.
Could it be that more information might be shared during each of the publicly traded company’s next quarterly earnings calls. Both companies will release quarterly financial information during calls in mid-May.
