BR Foods to Fully Absorb Sadia

Brasil Foods (BRF) has decided to fully absorb frozen food producer Sadia as a way to streamline the business. The move would result in BRL215m ($125m) in losses based on a 2011 fiscal year valuation, allowing for deferred income tax and social contribution over tax losses, the company says. Under the deal, the company expects to reduce operating and administrative costs and rationalize certain aspects of the business. Sadia’s shares are already 100% owned by BRF but these would be cancelled, and Sadia would cease to operate as an entity following the absorption. BRF officials could not immediately offer any additional details on the move and could not say if the company retained any advisors. The Sadia move comes just two months after BRF and Marfrig agreed to swap a number of assets to satisfy asset divestments that regulators demanded from BRF and increase Argentine exposure to its portfolio of businesses. BRF was originally born from the combination of Perdigao and Sadia in 2009.