May 19 (Bloomberg) -- Perdigao SA, Brazil’s largest food company, agreed to take over rival Sadia SA in a share-swap transaction that will form the world’s largest poultry company by market value, overtaking Tyson Foods Inc. of the U.S.

The two companies will hold a news conference today in Sao Paulo at 9:30 a.m. New York time to “detail the deal,” Sadia said today in a statement to Brazil’s securities regulator. The new company will be called BRF Brasil Foods SA.

Perdigao pursued a takeover with Sadia after its smaller rival posted the first annual loss in its 65-year history because of wrong-way bets on the Brazilian currency. Combining the two companies will generate 2 billion reais of cost savings in distribution and production, according to Denise Messer, an equity analyst at Brascan Corretora in Rio de Janeiro.

“They have a lot of synergy to capture,” she said in a May 12 interview. “They’ll save a lot.”

The combined company would be valued at about $5.3 billion, based on yesterday’s market value for each, compared with $4.97 billion for Springdale, Arkansas-based Tyson Foods.

Perdigao overtook Sadia as Brazil’s biggest food company in 2007, a year after rejecting a 3.9 billion-real takeover bid from its competitor. The failed offer prompted Perdigao to buy poultry and dairy producer Eleva Alimentos SA. The company previously bought margarine brands from Rotterdam-based Unilever NV and the meat-processing unit of Cebeco Groep BV.

Italian Founders

Perdigao, founded 75 years ago by Italian immigrants to Brazil, sells products including poultry, pizza and lasagna in more than 110 countries and has more than 55,000 employees. The company’s brands include the namesake Perdigao, Batavo and Perdix. Sadia, whose name in Portuguese means ‘healthy,’ was founded in 1944 and makes more than 2,500 types of food.

The combined new company would become the third-biggest meat processor in the Americas by sales after Tyson and Brazilian competitor JBS SA, according to Mariana Peringer, an equity analyst at Banco do Brasil SA in Sao Paulo.

Brazil’s state development bank, BNDES, is financing the biggest acquisitions in the country as other sources of credit dry up, driving a consolidation in the meat, ethanol, paper and telecom industries and creating “national champions,” according to Marcello Hallake, an M&A lawyer in New York who has spent more than a decade advising in Latin America.

BNDES is “interested” in financing any proposal from the meatpacking and food industry, according to Jaldir Lima, head of agricultural industry department at BNDES.

Struggling with Debt

Sadia, struggling with debt after settling wrong-way currency bets, had jumped 60 percent before today in Sao Paulo trading since March 16, when it said it was in merger talks with Perdigao. Perdigao rose 19 percent over the same period, compared with a 33 percent gain for the benchmark Bovespa index.

Sadia booked more than 3 billion reais of expenses related to derivatives in the second half of 2008 after Brazil’s real slumped 31 percent. The poultry exporter, based in Concordia, Brazil, had its first annual net loss since it was founded in 1944 last year because of the wrong-way currency bets.

Sadia was the first Brazilian exporter to announce derivatives losses on Sept. 25, after it fired Chief Financial Officer Adriano Lima Ferreira for allegedly exceeding company limits on currency hedging contracts.

Votorantim Participacoes SA, the closely held producer of materials from aluminum to cement that owns Votorantim Celulose, spent 2.2 billion reais to settle wrong-way bets on currency derivatives last year.

To contact the reporter on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net

Last Updated: May 19, 2009 08:45 EDT