Brazil’s BRF proposes $1.2 billion capital enhance, market sees potential move by Marfrig By Reuters

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© Reuters. FILE PHOTO: Logos of Brazilian meatpacker BRF SA are seen within the headquarters in Curitiba, Brazil October 1, 2019. REUTERS/Rodolfo Buhrer/File Photo

By Gabriel Araujo and Tatiana Bautzer

SAO PAULO (Reuters) – Shares in Brazilian meals processor BRF SA (NYSE:) soared on Friday after it proposed a capital enhance via the issuance of 325 million new frequent shares, probably elevating 6.63 billion reais ($1.17 billion).

The move prompted analysts and market gamers to take a position if minority shareholder Marfrig Global Foods SA intends to accumulate a controlling stake within the firm with out the danger of triggering a poison capsule.

One supply with information of the matter, nonetheless, mentioned Marfrig controlling shareholder Marcos Molina didn’t have discussions with BRF concerning the transaction and didn’t intend to extend its present 33% stake considerably through the supply.

BRF mentioned in a late Thursday securities submitting it plans to develop its operations and make strategic investments.

The deal remains to be pending approval from a shareholders’ assembly scheduled for January and can depend upon market circumstances.

Credit Suisse (SIX:) analysts mentioned it will be a “very solid opportunity” for Marfrig to purchase an incremental stake with out being topic to the 40% premium during the last 30 days common worth set in poison capsule guidelines, which aren’t triggered by the proposed capital elevate.

Itau BBA and BTG Pactual analysts expressed an analogous view.

“If Marfrig goes for a significant premium over the current stock price and no other shareholder follows along with a share subscription, Marfrig could reach a stake of 51%,” Itau famous.

“We’ve never thought Marfrig would just be a passive shareholder of BRF. The company has a long track record of aggressive and transformative M&A deals,” BTG mentioned.

Marfrig didn’t instantly reply to a request for remark.

BRF shares, which closed at 20.40 reais on Thursday, had been up 5.4% at 21.52 reais on Friday. Those of Marfrig rose 4.2% to 23.90 reais. They had been the highest gainers on the index.

($1 = 5.6884 reais)

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