Marfrig-BRF: Beefing up

MBRF Global Foods. That’s the name of world’s newest meat-processing giant, one that boasts $29 billion in combined revenue and a presence in 117 countries across the globe. Its best-known packaged meat brands include Sadia, Qualy and Bassi.

The merger, which came in the form of a share exchange, was announced in May and given the green light by the Brazilian antitrust authority in September.

Undeterred by failed merger discussions in 2019, Marfrig signaled its intentions in 2021 when it acquired almost 25% of BRF, subsequently buying up more of its Santa Catarina-headquartered rival, eventually achieving a controlling interest in 2024. 

Speaking to Valor International, MBRF chairman Marcos Molina said the merger was expected to bring $90 million per year in synergies, including $60 million in annual operating cost savings. Of MBRF’s estimated net revenue, 43% comes from the US, 24% from Brazil and 20% from Asia. In terms of sales, 38% is attributed to processed foods, 34% to poultry and pork, and 29% to beef.

Objections overruled
Brazil is the world’s biggest exporter of beef and the third-biggest meat producing country, so when two of its main players decided to merge, there were bound to be competition concerns. Leading the objections was rival Brazilian meat processer, Minerva Foods.

However Brazil’s competition regulator, CADE, rejected Minerva’s claims, concluding there was limited overlap in business interests (Marfrig processes beef, while BRF’s business is chiefly pork and poultry) and unreservedly approved the transaction on September 5th.

Opponents of the merger can point to the fact that Marfrig’s US subsidiary, National Beef, was embroiled in a recent price-fixing scandal involving other major US meat processing companies, with the fear being the Brazilian consumer will end up paying more for their meat at the checkout following this tie-up.

The removal of the 40% US import surcharge improves the outlook for MBRF Global Foods, given the US accounted for 45% of its net revenue in the last quarter

Riled by the cost of meat in the US, in November the Trump administration ordered a DOJ investigation into whether Big Meat violated antitrust laws by fixing prices, limiting competition or creating monopolies. President Trump believes that industry consolidation has crushed competition, with the four biggest meat packing companies – JBS, Cargill, Tyson Foods and National Beef – accounting for 85% of the US beef processing market, up from 36% in 1980. The outcome of this investigation could have significant ramifications for the new company in terms of potential fines and its future expansion plans – food for thought considering the mooted possible relocation of MBRF Global Foods’ headquarters to the land of Uncle Sam.

Significant synergies
According to Virtus BR Partners, the merger between Marfrig and BRF was a logical progression for Marfrig, which already held a controlling 53.1% stake in BRF. At first, the merger would generate approximately R$805 million in synergies annually, primarily comprised of: i) R$485 million from cross-selling, price advantages, and supply chain efficiencies; as well as ii) R$320 million from streamlining commercialization, logistics, and corporate structure.

Additionally, the post-merger company would benefit from approximately R$3 billion of present value in tax optimization, primarily carried out over the next three years. The exchange ratio of 0.8521 MBRF shares offered for each BRFS share held by minority shareholders appears to favor Marfrig's shareholders initially.

However, current share prices do not appear to reflect the expected synergies arising from the post-merger integration. On May 14th, 2025, before the transaction, Marfrig’s market capitalization was R$16.9 billion, while BRF’s was R$33.2 billion, valuing the stake held by BRF’s minority shareholders (including SALIC) at R$15.6 billion. As of December 2nd, 2025, following the merger, MBRF had a market cap of R$26.3 billion. Such a number implies R$15 billion for former Marfrig shareholders, coupled with R$2.3 billion received in dividends (or R$17.3 billion versus R$16.9 billion pre-merger; a modest 2.5% increase), and R$11.3 billion for BRF's former minority shareholders, along with approximately R$1.5 billion received in dividends and interest on capital (or R$12.8 billion versus R$15.6 billion pre-merger; a 17.6% decline).

The merger’s initial turbulence has not overshadowed the clearer medium-term trajectory of operational recovery and market repositioning. The latest quarter showed a 62% drop in net profit, but the long-term fundamentals point to meaningful EBITDA expansion. Growth prospects are supported by the strengthening of Halal production, backed by the company’s cooperation agreement with the Saudi government. In addition, the EU’s pre-listing of MBRF reopens the door for poultry and egg exports, with potential financial impact as early as 2026.

From a broader perspective, the combination of the EU pre-listing and the removal of the 40% US import surcharge improves the outlook for margin recovery, especially given that the US accounted for 45% of MBRF’s net revenue in the last quarter. The company is also working to rebuild its European market share, aiming to return to the level it held before the 2018 embargo that affected 12 Brazilian plants.

Overall, the company’s financial and economic profile remains solid and suggests a credible path to medium- and long-term value creation, even if short-term returns may be more modest.