July 22 (Bloomberg) -- BRF Brasil Foods SA, the biggest Brazilian food processor, is raising 5.29 billion reais ($2.8 billion) in the country’s second-largest stock sale this year after its acquisition of Sadia SA boosted debt.

Brasil Foods, formerly known as Perdigao, said in a regulatory filing yesterday it is selling 132.3 million new voting shares for 40 reais each. The sale includes American depositary shares, each of which represents two common shares, that were priced at $42.01, according to a statement today.

The share pricing in Brazil topped the 39-real forecast by Eric Conrads, a hedge fund manager at ING Investment Management SA, which oversees $12 billion in emerging-market assets.

“Investors gobbled it up like feijoada,” Conrads said, referring to a traditional Brazilian dish. “The timing for the offering was perfect,” he said by telephone from Mexico City.

Brasil Foods pursued the acquisition of Sadia after the smaller rival booked more than 3 billion reais of losses because of wrong-way bets on the Brazilian currency. Both companies in May posted losses for a third straight quarter as costs rose and the global recession pared demand for chicken and turkey.

Brasil Foods fell 1.5 percent to 39.99 reais in Sao Paulo trading. The stock climbed 10 percent since May 18, the day before the acquisition was announced, compared with a 3.1 percent gain for Brazil’s benchmark Bovespa index. The New York- traded shares declined 2.6 percent to $41.78 today.

Stock, Currency Rally

The Bovespa has rallied 41 percent this year on speculation rising commodity demand and record-low interest rates will boost economic growth. The Brazilian real has jumped 22 percent in 2009, the second-best performer among the 16 most-traded currencies after the South African rand.

Cia. Brasileira de Meios de Pagamento, a Sao Paulo-based Visa Inc. affiliate, set a record in Brazil this year with its initial public offering. Shareholders of VisaNet, as the company is known, raised 8.4 billion reais in the June sale.

Sao Paulo-based Brasil Foods earlier this month completed the purchase of 88 percent of Sadia’s voting shares and plans to buyback all of the company’s remaining equity in an all-stock exchange valued at 3.9 billion reais, according to yesterday prices.

The new stock will start trading July 23.

Sadia’s total debt doubled at the end of the first quarter from a year earlier to 8 billion reais, according to data compiled by Bloomberg. Brasil Foods’s total debt rose 66 percent from a year earlier to 5.4 billion reais at the end of the first quarter.

Moody’s Investors Service said May 21 that it may lower Brasil Foods’s local-currency credit rating because the acquisition will increase debt and reduce liquidity. Moody’s rates Brasil Foods Ba1, one level below investment grade.

Standard & Poor’s Ratings Services said May 19 it also may cut Brasil Foods’s BB+ corporate-credit rating.

To contact the reporters on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net; Flavia Bohone in Sao Paulo at fbohone@bloomberg.net

Last Updated: July 22, 2009 17:20 EDT