Minerva Rises to Six-Week High on BRF Beef Deal: Sao Paulo Mover

Minerva SA climbed to a six-week high after acquiring two plants in Brazil’s top beef-producing state in a deal that gives BRF SA (BRFS3), the country’s biggest foodmaker, a 15 percent stake in the company and two seats on its board.

Minerva gained 5.2 percent to 10.41 reais at 1:04 p.m. in Sao Paulo. A close at that level would be the highest since Sept. 19. Trading volume was 1.8 times the full-day average of the past three months. BRF rose 0.3 percent to 52.27 reais.

The plants Minerva acquired from BRF are in Mato Grosso, which processes more cattle than any other state, according to data compiled by the Brazilian meat exporters’ association, Abiec. The location will help the company, the country’s third-largest beef producer by market value, increase its efficiency and reduce costs, according to Banco Bradesco SA (BBDC4)’s brokerage unit, which raised its recommendation on the stock to the equivalent of hold from sell.

“With the two new plants, we believe Minerva will be better positioned in terms of cattle supply and access to cheaper feed costs,” Gabriel Lima and Rodrigo Coelho, analysts at Bradesco, wrote in a research note to clients. BRF’s decision to take a 15 percent equity stake and two board seats also indicates that it “recognizes Minerva as a high-class company,” the analysts wrote.

The new plants will increase Minerva’s slaughter capacity by 23 percent, according to a regulatory filing after the market closed Nov. 1. Before the deal, the company had eight plants in Brazil, one in Uruguay and two in Paraguay, according to a statement on its website.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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