Brasil Foods Vote Should Go Beyond Prices, Cade’s Lima Says

Brazil’s antitrust regulators can’t block BRF – Brasil Foods SA’s takeover of Sadia SA based solely on domestic price increases, said Luiz Augusto Lima, the federal prosecutor at the agency.

Cade, as the agency is known, needs to take into account the deal’s economic benefits when deciding whether to approve the takeover that created the world’s biggest poultry exporter, Lima said today in an interview from Brasilia.

“The council must take into account not only consumers’ interests, but also social, economic development, exports, jobs, and gains to the society,” Lima said.

Brasil Foods is offering to negotiate an agreement with Cade to save the $3.8 billion takeover about two years after the combination was formed from Perdigao SA’s takeover of Sadia. Chief Executive Officer Jose Antonio do Prado Fay wants time to discuss possible solutions after commissioner Carlos Ragazzo said the company wields too much market power.

Lima said he doesn’t rule out taking the agency’s decision to court at a later date.

“At this moment, I won’t be going to court because of good judgment as I didn’t have access to all documents pertaining to the case,” he said.

Brazilian antitrust regulators postponed a final decision on the merger June 15, after commissioner Ricardo Ruiz said the company asked for more time to negotiate an agreement. Brazil’s antitrust agency will vote on the deal July 13, commissioner Olavo Chinaglia said yesterday.

Currency Losses

Brasil Foods bought Sadia in 2009 after the bigger rival booked more than 3 billion reais ($1.88 billion) in wrong-way currency bets, following the Lehman Brothers Holding Inc. collapse. The deal was supported by Brazilian pension funds of state-run companies, which collectively owned 22 percent of Perdigao and now hold a 23 percent stake in Brasil Foods.

Brasil Foods rose 5 centavos, or 0.2 percent, to 24.75 reais in Sao Paulo trading at 1:11 p.m. New York time. The stock has gained for four days, after losing $2.2 billion in market value since May 31.