BRF-Brasil Foods: How Buyouts and Takeovers Have Strengthened the Company

BRF-Brasil Foods S.A. is a consumer foods company based in Brazil. The company was founded by the Ponzoni and Brandalise families in 1934 in Santa Catarina state. Its original name was Ponzoni, Brandalise e Cia. The Brandalise family managed the company until September 1994.

Only six years into its operations, BRF-Brasil moved from general trading to foodstuff and its related products, including processed pork in 1940. In the 1950s, the company also engaged in processing of poultry.

The company started exporting its products in Saudi Arabia. Through the next two decades, BRF-Brasil expanded its export markets to include Japan and Europe. Simultaneously, expansions through acquisition of pork and poultry processing businesses were made through the early 1990s.

In 1993, the company experienced a reversal of fortunes due to the global crisis during that time. The costs increased. Investments were at the lowest levels. Opportunities for expansion were limited. Marketing strategies failed. When it was already difficult to sustain the company’s liquidity, the Brandalise family sold 80.68% of their common shares and 65.54% of their preferred shares in 1994. The buyers consist of 8 pension funds.

Following the buyout, a new team of executives were hired to restructure the company. Capital stock was increased. Modernization programs were implemented. The non-essential operations were discontinued.

Further takeovers were consummated in the next few years. Of the eight original pension funds, two survived through the 21^st century: Sadia and Perdigão. They entered into a partnership agreement in May 2009 that created the BRF-Brasil Foods S.A.

Further reorganization and restructuring were implemented which included the disposal and discontinuation of some brands and product lines. The revamp yielded revenues of R$1.7 billion while the suspension of Sadia and Perdigão brands yielded revenues of R$1.2 billion.

An asset exchange agreement was entered into by BRF-Brasil and Quickfood S.A. (of Argentina) in December 2011. BRF-Brasil will take over the entire shareholding of Quickfood which is equivalent to 90.05% of the capital stock on top of cash payment amounting to R$350 million.