BRASILIA, BRAZIL – Brazilian meat producers BRF S.A. and Marfrig Global Foods S.A. announced in security filings on May 30 that the two companies are open to a potential merger. If the two companies are combined it would create one of the largest meat producers in the world.

BRF, a leader in world chicken exports, said it agreed to a memorandum of understanding (MOU) with Marfrig, giving the companies 90 days, and possibly 30 more days, to negotiate the potential combination of assets and shares.

“It is expected that a business combination between the company and Marfrig would raise the combined company to a leadership position in the markets in which it will operate,” BRF said. “The company also expects the transaction will reduce its exposure to sector risks and generate synergies due to the balance and complementarity of products, services and geographic diversification, with a material presence in Brazil, the United States, Latin America, the Middle East, and Asia.”

The company also said the transaction would provide a reduction in financial leverage, adjustment of capital structure, focus on Brazil and halal markets, innovation, expansion of international markets with a larger product base and stability of the management model.

In December 2018, Marfrig acquired majority shares of Argentina-based Quick Food S.A., which was owned by BRF, for $60 million. Marfrig also agreed to acquire real estate and equipment from a BRF unit located in Várzea Grande in the Brazilian state of Mato Grosso for 100 million Brazilian reais.

Marfrig also acquired Kansas City-based National Beef Packing Co. L.L.C. last June.